Member-only story
5 Truths About Stablecoins Every Crypto Investor Should Know
They aren’t stable and may be prone to “bank runs”
The cryptocurrency industry is still in its infancy, and the sub-category of stablecoins even more so. However, with an estimated size of around $160 billion — compared with only $11 billion in June 2020 — the stablecoin sector has grown considerably. Trading data for some of the oldest stablecoins are now available for almost five years, and so we can start to draw some conclusions, not based on conjecture, but based on facts. I’ve collected data on the largest stablecoins that claim to be pegged to the U.S. dollar, and I’ve come up with five truths that every crypto investor should know.
Stablecoins 101
Stablecoins are cryptocurrencies that are generally considered to have a relatively stable price, with a peg to a fiat currency like the U.S. dollar, pegged to the value of other cryptocurrencies, or some other assets like gold. While traditional cryptocurrencies like bitcoin tend to be quite volatile as I explain here, stablecoins are designed to not be volatile. Stablecoins are preferred by some traders as a means to buy or sell traditional cryptocurrencies because then only the value of the crypto investment varies. Stablecoins also facilitate quick trading compared with the alternatives…
