forgotten asset, they have gained notoriety due to global economic turbulence and a desire by many investors to seek out unique assets that can help diversify their portfolios.
Stablecoins are a digital currency with a reserve asset backing each coin. Some rely on fiat money like the U.S. Dollar or Euro. Others rely on precious metals as a base, like gold-backed cryptocurrency. Some are underpinned by a basket of other cryptocurrencies, usually overcollateralized to account for the unpredictability of the digital asset world.
While the cryptocurrency market is still small compared to the global world of stock trading, the industry grows every day thanks to innovations in the decentralized finance (Defi) sector, among others.
As 2021 brings continued concerns about COVID-19 and its effects on the global economy, a growing number of crypto investors are interested in adding stablecoins to their portfolio. Skepticism still abounds due to delays with vaccine rollouts and when the world, and the global economy, will be able to ‘get back to normal.’ As a result, investors are still seeking out assets like stablecoins to help weather financial concerns in the new year.
2021’s Best Stablecoin Options For Investors To Choose From
The best stablecoins to invest in 2021 contain a few industry mainstays along with some that might seem more surprising at first glance in a unique economic year. Keep reading to get an idea about the year’s best stablecoin investment.
- Tether: Tether remains the globe’s most well-known and popular stablecoin. The digital asset started back in 2015, is tied to the U.S. Dollar, and built on the Ethereum ERC-20 standard. While Tether (the company) is infamous for its run-ins with regulators and investors, the cryptocurrency still proves to be very popular and dominates the stablecoin world. The asset is a strong investment option for 2021 due to its notoriety and surging popularity.
- Dai: Dai is one of the more intriguing stablecoin options. Developed in 2017 by MakerDAO, the asset is technically crypto-collateralized but operates based on a complex model with many moving parts. The MakerDAO decentralized autonomous organization is an innovative entity aiming to approach stablecoins in a new way. The cryptocurrency has become more popular due to its use in the DeFi space. As the decentralized finance world only continues to grow, the Dai stablecoin looks to only increase in popularity and rise in value.
- GoldCoin: GoldCoin is a stablecoin backed by 99.9% fine gold bullion. Investors maintain the ability to redeem digital holdings for physical bullion anytime, in a secure and safe process. The cryptocurrency is fractionalized – meaning investors can buy any amount of GoldCoin. This contrasts with physical bullion, which can only be bought in certain denominations. Built on the ERC-20 standard, GoldCoin buyers just need the appropriate wallet to send and receive the cryptocurrency and are not required to submit any other personal information. The unique nature of GoldCoin, allowing investors to build a bullion portfolio while enjoying the benefits of the bustling cryptocurrency world, make the asset a strong buying option in the new year.
- BinanceUSD: BinanceUSD, or BUSD, is built on the Ethereum blockchain as a partnership between the well-known Binance cryptocurrency exchange and Paxos Trust Company. Launched in September 2019, the coin is regulated by the New York State Department of Financial Services, which means investors are buying a coin with a large amount of consumer protection on their side. The cryptocurrency is collateralized by U.S. dollars stored in banks insured by the U.S. FDIC. Global auditors review the coin’s smart contract infrastructure, giving investors another layer of protection. BUSD is a good investment option due to the stringent regulatory and review requirements the asset is subject to and its notoriety due to the coin’s connection with Binance and Paxos.
Stablecoin Investments In 2021
2021 is looking to be a popular year for stablecoin investments due to economic uncertainty and turbulence. The above coin list provides buyers a wide and diverse range of options, depending on the preferred base asset of choice and stablecoin structure.