Introduction

Hello guys,
I want to welcome all of us to yet another phase in the crypto academy community I.e week 6. Sincerely it has been very fun since the commencement of the ongoing lecture in the community. I want to in a matter of seriousness appreciate @steemitblog for this very initiative because it has to help me as a person to explore much in the crypto world. To my able professor in the person of @yohan2on, I say a very big thank you to you for your well detailed and self-explanatory lectures.

Without much time wasted, after reading and learning from the professor himself I will be discussing very briefly the blue coin. If you want to read more about a stable coin you can as well click on the link

What Are Stable coins

Stable coins as the name suggests are cryptocurrencies that are created with the primary aim of making them price stable. Unlike another cryptocurrency, the stable coin is aimed at been stable at all time, these are stability is achieved simply by pegging the token to an asset such as fiat or gold as the case may be. We can also say that a stable coin is a digital asset that remains stable in value. This implies that one can be able to say the price of it at any point in time. Example of stable coins are BitUSD, USDT, USDC, True USD, Maker DAI just to mention but a few.

Types of stable coins

Aside from the various examples given about the stable coins, the stable coins in the crypto market are further placed into four (4) different categories and I will briefly explain the different categories in which these coins are placed.

• crypto-backed stable coins
• commodity-backed stable coins
• Fait-collateralized stable coins
• Non-collateralized stable coins

crypto-backed stable coins

In this category, the stable coin operates in the same way as fiat-backed stable coins the only difference is that instead of using fiat as collateral, cryptocurrencies are used as collateral.

Merit

• No custodian is required.
• No form of audits is needed
• since it is based on blockchain technology, it is decentralised.

Demerit

• Collateral as we all know is based on crypto.
• It is very complex.

commodity-backed stable coins

As the name implies commodity-backed, here in this category, another precious commodity is used as collateral such as real estate, oil and any other precious metal.

Merit

• Due to commodities tokenization, more liquidity is now found in the market.
• price of a commodity is stable

Demerit

• audit in this category is compulsory
• it has a single point of failure
• Risk of being hacked

Fait-collateralized stable coins

Here in this category fiat are considered it's the most useful category because many people tend to convert their crypto in real money (fait) from the bank.

Merit

• Have a very simple structure
• Since it is a stable coin there is no room for instability.

Demerit

• Audits is needed
• Hackers can easily penetrate

Non-collateralized stable coins

In this category, it uses a form of algorithm-generated mechanism I.e smart contract to sell or supply tokens whenever there is either an increment or decrement in the price of an asset.

Merit

• uses smart contract
• it is decentralized in nature

Demerit

• More complex than any other category
• Probability of failure

After all said and done, I will be discussing one of these stable coins today. But first and foremost, I want to take us back memory lane as to when was the first stable coin created and what is the name? The first stable coin is BitUSD created in 2014. With that in mind, I will want to talk about USDT. It was also launched in the year 2014.

Tether (USDT)

Source

USDT is one of the oldest and yet still more reliable stable coin in the crypto market. Now, it is no longer fertile that the price of USDT is almost equivalent to the price of $1. USDT over the years has always maintained standard.
USDT allows individuals to quickly and efficiently transfer value from one exchange to another without using a volatile cryptocurrency. The fact that a US dollar backs USDT appealed to stock magnates and daily traders. Its relevance as an alternative to fiat provides an avenue for investors to park their investments when the market is volatile.

Merit of USDT

• Transparency:- The buyer is always secured since the price of $1 =1usdt.
• Fiat Currency: Easy to transact since the worth is almost equal to that of US dollars.
• 24 x 7 Customer Service: customer service is always available. You can communicate with their agent at any point in time.
• Reliable and Secure: it is well protected from every form of attack.

Limitation of USDT

Just like other stable coins, USDT has also a few limitations among which includes

• Stable coins are centralized in nature I.e traders have no option than to trust the exchange to back their Fiat.
• Economic failure can crash fait in USDT.
• Stable coins are less liquid.

Use of USDT

• use for the daily transaction of buying and selling
• Helps to check currency instability
• can be used to swap between currencies in any exchange platform.

Conclusion

I want sincerely say I have really learnt a whole lot on this very topic and I have actually provided a few of my piece so do well and read it.

Special regards;
Cc: @steemcurator01
Cc: @steemcurator02
Cc: @steemitblog
Cc: @yohan2on
Cc: @bright-obias

Thanks for reading...