For both owners and observers, cryptocurrency is primarily an investment asset. This approach has driven trading, caused Goldman Sachs to announce a dedicated trading desk, and (to a significant degree) has caused the speculative price swings of the cryptocurrency market.
However, it is not what the most dedicated members of the crypto community have in mind for their invention. They see cryptocurrency as the future of money. For developers up to (and possibly including) the infamous Satoshi Nakamoto, the theory is that someday we’ll all be paying our bills and buying coffee on the blockchain.
The trouble is that these two ideas are perhaps irresolvable. Bitcoin and its progeny are built around the idea of digital gold, with miners digging it out of the ether and a fixed amount that will ever exist. But gold makes for a terrible currency.
For a currency to work as more than someone’s pie-in-the-sky investment product, it has to be a reliable store of value. Inflation has to stay within safe, stable margins and deflation has to happen almost never. In a modern economy, this means that someone needs to regulate the supply of currency based on market metrics such as productivity, population growth, and overall economic growth. Digital gold can’t do that. Neither can a project with no stabilization mechanism since there is no one to exert the necessary judgment.
Fiat currency can. That is why several cryptocurrency projects have taken a new approach. Instead of replacing traditional money, they’ll work alongside it. “Stable cryptocurrencies” peg themselves to a currency or asset of choice, typically the dollar, and automatically adjust the number of tokens in circulation to keep the price stable. It’s an approach actually taken by several countries around the world; for example, Cambodia pegs its riel at 4,400 to one U.S. dollar. Their goal is to create an electronic wallet that serves as a bank account, not an investment portfolio. Here are some of the best stablecoins out there.
|Stablecoin||Description||Year Founded||Number of social followers||Stabilized Asset||Quality of Team||Stabilization Mechanism||Score|
|True USD||True USD is a one-to-one stable currency which pegs its value to $1 U.S. per token.||2018||6.6k||U.S. Dollar||The young team behind this project boasts some of the most impressive technolgoy names in the field, although little financial experience.||Escrow: Each True USD is backed by $1 U.S. held in an escrow account by third parties. Qualifying institutions can participate in the True USD system, eliminating the need for trust in a central project (albeit replacing that with the need for trust in third-party accounting). With only two minor deviations, the price has remained stable within $0.02.||4.5|
|AAA Reserve||This token is backed by a bundle of currencies and investment products, and should be more accurately considered a financial product rather than a currency.||2018||845||Numerous currencies and investment vehicles||A leadership team with extensive experience in finance and economics||A private investment fund with a token mechanism, it has maintained extremely high price stability due to its diverse portfolio.||4.3|
|Dai||Dai is a decentralized stable currency which is pegged to the U.S. Dollar at a 1-to-1 ratio.||2017||13.1k||U.S. Dollar||MakerDao's Founder has almost no experience, having graduated in 2014. It has made up for this lack by hiring other executive level talent with a deep bench of relevant experience.||Collateral Against Ethereum: To create Dai tokens users have to purchase and stake an equal value (in U.S. Dollars) of Ethereum tokens. As the price of Dai rises, users will be incentivized to create more. As the price falls, users will be incentivized to sell their assets back to the pool.||4.25|
|Digix||Digix takes the idea of a blockchain gold standard literally, promising that each DGX token represents 1 gram of actual, solid gold in a vault in Singapore. The utility of this over purchasing gold outright or an options contract remains uncertain, but the mechanism is sound.||2016||15.7k||Gold||Digix is run by a team with extensive experience in both finance and blockchain development at some of the world's largest firms.||Asset-Backed: A Digix token is minted once the underlying Proof of Provenance Protocol confirms that a corresponding ounce of gold is in the vault. The price has fluctuated within approximately 25 percent since inception.||4.2|
|Tether||Tether is one of the most well known, high-value, and reliable stablecoins on the market.||2015||27.4k||U.S. Dollar||Bloomberg, among other outlets, has published very serious questions regarding the accounting practices of Tether. The company's founders have a range of professional experience, ranging from fintech to retail.||Collateralized: Each Tether token has a corresponding $1 U.S. invested in an owned account. While serious questions have been raised as to the company's accounting practices in this regard, the token's price has remained stable within $0.05.||4.1|
|EURS||EURS is the stablecoin introduced by Stasis.||2018||1.5k||Euro||The Stasis team comes from both a blockchain and a finance background, but with no significant corporate names in either field.||Collateralized: Each EURS token is backed by a fixed amount of euros held in an owned account. Stasis has not disclosed the name of the holding entity, and the company's published plan for upper limit price stabilization leaves much to be desired. However the token has remained within a variance of $0.07 since its launch, which deserves note.||3.8|
|StableUSD||Stably is a cryptocurrency pegged to the U.S. dollar, with each token set to $1.||N/A - This currency has not yet publicly launched.||287||U.S. Dollar||Stably has a team with experience in both technology and finance. While little background in blockchain, their c-level leadership has worked with impressive firms in this space.||Collateralized: Stably will hold $1 U.S. in reserves for each token distributed, with quarterly audits.||3.65|
|White Standard||The White Standard is the first of three stablecoins from the White Company. Backed by the U.S. Dollar, the subsequent coins will be stable to the pound and the euro.||2018||3k||U.S. Dollar||The team behind the White Company boasts a range of experience, from impressive financial credentials to vague claims of "luxury brands."||Collateralized: Each WSD token is backed by a $1 deposit held by the White Company. This is audited monthly. The WSD token is intended chiefly as a banking product, allowing deposits, withdrawals and transfers around a stable currency. The token was launched one month ago and has varied by more than 30 percent since then.||3.45|
|Alchemint SDUSD||Alchemint uses the NEO blockchain. Its SDUSD token is intended to be stable against the dollar, based on holdings of the NEO token.||2018||4.1k||U.S. Dollar||Little English information is available about the Alchemint team.||Mortgage Backing: To purchase a SDUSD a user must make a deposit in NEO tokens. The system requires purchasers to stake deposits at a 5-1 rate, meaning that at any time Alchemint holds approximately 20 percent of the stable value of the SDUSD in assets. The rest is considered vested value held by SDUSD holders.||3.2|
|Basecoin||Basecoin is an automated stablecoin in which the network will adjust quantities of the token around a $1 U.S. peg.||N/A - This currency has not yet publicly launched.||5.3k||U.S. Dollar||Basecoin has attracted high profile investors and its founders include alums of Google.||Network Value: Basecoin's value will be automatically maintained by its network. Tokens will be released and burnt based on the current market price. This model has not proven succesful elsewhere.||2.9|
|USDX||Information on USDX is difficult to come by in English. The token is pegged to the U.S. Dollar through an automated system.||2018||Magic Eye's social media links do not work.||U.S. Dollar||Little English information is available about the USDX team.||Network Value: USDX's value will be automatically maintained by its network. Tokens will be released and burnt based on the current market price. Token holders will verify the exchange rate. Similar models have not proven succesful elsewhere.||2.9|
|Stronghold USD||Stronghold USD is a proposed stablecoin from IBM. While not suitable yet for review, it is worthy of note due to the involvement of both IBM and Stronghold.||N/A - This currency has not yet been developed.||2.1k||U.S. Dollar||IBM and Stronghold are developing this currency for IBM's use.||N/A - This currency has not yet been developed.||2.8|
|Corion||Corion is a stablecoin pegged at a 1-to-1 ratio to the U.S. Dollar. Their system appears to have failed.||2017||1.7k||U.S. Dollar||Corion's executive team has a reasonable amount of experience in fintech and blockchain development.||Network Value: Corion's currency is based on the fees charged by its network. If its currency gets too valuable, the system automatically triggers new token release. If the currency drops in value, the system automatically uses network fees to burn tokens. Based on the coin's historic price, this model has failed.||2.6|
|Nomin (aka nUSD)||Nomin is a token backed by the value of the Haven transaction network. With no centralized asset or fiat currency, the value of the nomin (as well as its supply) will be system-regulated as the underlying value of Haven fluctuates.||2018||11.5k||The Haven Network||The Haven team has little to no experience in technology or blockchain. While a seemingly serious, committed group, the LinkedIn profiles of Haven's top executives claim recent positions selling cheeseburgers, writing novels and selling cell phones.||Network Value: Nomins are backed by a secondary currency, the Haven. Havens have a fixed amount, making their total value at all times equal to the value of the Haven transaction network. The supply of nomins floats against this total value, keeping their price stable and backed by the aggregate network value. It is a novel approach, but the token's price has had a 30 percent variance since launch.||2.55|
|NuBits||NuBits was a decentralized cryptocurrency which pegs itself against the dollar. While still in operation, it is no longer price stable.||2014||15.5k||U.S. Dollar||Little information is available, and none published on NuBits' website||Voting shares and rewards for users who take action to stabilize the network. This mechanism was unsuccesful.||2.5|
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