Should First-Time Crypto Investors Buy the Most Popular Stablecoins?

Stablecoins are quickly gaining momentum among users from all over the world. As technologies such as fast internet, blockchain, and more are getting access to common users, there has been an increasing trust in crypto stablecoins. Additionally, crypto stablecoins allow governments across the world to regulate and monitor them which ultimately makes it easier for governments to trust these biggest stablecoins and allow their uses across industries.

Now, are you thinking about investing in cryptocurrency or the biggest stablecoins? You have probably seen a lot about crypto and the list of stablecoins in recent years and want to get in on the action. Well, the truth is, there is a lot to learn about when it comes to the world of cryptocurrency and stablecoins lists. You need to do your research first and make sure that you know everything there is before risking your own money by investing in cryptocurrency and stablecoins.

For example, there are many new crypto investors wondering if they should buy any type of stablecoins. Well, the answer to this question is that it depends. Let’s take a closer look and see whether you should make this move and buy Dai or some other stable cryptocurrency.

What are stablecoins?

It does not matter what type of investment you are making; there is going to be some type of risk. If you are a new crypto investor, you do not want to go too wild and make a lot of mistakes while trusting your money with a stablecoin cryptocurrency. This is how you lose a lot of money. Instead, you might be looking for safer options to invest in. So, are the most popular stablecoins the answer? But before we find that out, why don’t we understand the concept of stablecoin investments by knowing stablecoin cryptocurrency well first?

So, what exactly are stablecoins? Well, it is believed that they are a less volatile type of cryptocurrency. In particular, a stablecoin cryptocurrency is closer to real currencies and this provides some stability. In particular, stablecoins lists are backed by assets, which can include gold or cash. Think about it as almost like collateral. Therefore, they are a cryptocurrency that is backed by some sort of stable asset. Something to note about the list of stablecoins is that a central authority governs them. This is different from other traditional cryptocurrencies.

Therefore, it is often thought that first-time investors should choose types of stablecoins. Something you have to remember is that their stability is going to depend on the asset they are backed by. Therefore, you have to decide whether you trust the asset enough to invest in a stablecoin.

Is it good to invest in stablecoins?

Before you invest, and start looking for helpful tools like the best crypto trading apps that support stablecoins, it is useful to look at some examples so you can really understand what stablecoins are able to do. For example, a well-known stablecoin is Tether. This is pegged to the US dollar. In other words, every unit is going to have a US dollar in reserve. Other examples are going to be commodity-backed or cryptocurrency-backed stablecoin investments. Note that the fiat-backed stablecoins are generally classed as the most stable. The above image by Statista shows the rising marketing capitalization of stablecoins like Tether, Dai, USD Coin, and more in the global market between 2017 to 2022.

Another reason why investors like to use stablecoin investments is they can often avoid trading fees. This means that you can make more profit and not feel like you are using so much money when you are trading. Just make sure you check out the exchange first to make sure that this is the case.

Are most popular stablecoins a good investment? Well, this is a tricky question to answer. The fact is that they are classed as stablecoins. This means that their value stays around the same. So, if you are looking to make huge profits, this is not something you are going to do from investing in even the most popular stablecoins alone. But, there are other ways you can use them.

For example, there is the investment strategy of backing specific loans. Then, you are going to make a profit with loan payments. There are other techniques that also mean you generate something similar to banks and interest.

There are some people that like to invest in stable assets as a way to safely store money. Then, when there are slight fluctuations in price, they will cash in. Alternatively, it is just a way to store money in a reliable way. Then, they are able to use some of that money for buying other cryptocurrencies.

Crypto is Volatile

Something that you always have to remember when it comes to cryptocurrency is that it is volatile. Yes, there are a lot of amazing stories about how people have invested in and made huge amounts of money. Indeed, this is something that is still possible. But you have to remember that crypto is volatile. This means that things can change instantly, which can be a good and a bad thing.

Thus, when you are a beginner, it is easy to get carried away. But, you have to remember that cryptocurrency comes with risk and you have to be prepared to lose money sometimes. So, you should not be risking all of the money you have. Instead, you want to learn more about investing and trading. Then, you are going to be able to make better decisions.

Wrapping up

Yes, stablecoins are called this for a reason. But, this does not mean that they are risk-free. So, make sure that you do your research, take your time, and only use the money you are willing to lose if things go south. After all, Terra once lost nearly all of its value.

Something to note as well is that stablecoins are relatively new. So, there are some people that do not like to take this risk. In other words, they are concerned about vulnerabilities and other bugs that could come along. While this can seem rare, it could happen and it is something you will have to think about. There is also the fact that there could be regulations in the future that would affect stablecoins. 

Anyway, we hope that our take on stablecoins helped you in understanding them well and if it is your first time investing in cryptos like stablecoins, you are now mentally prepared to do that. On our platform, we keep publishing in-depth blogs and reports where you can explore to know everything about cryptos. You can also explore our reports to find suitable tech companies for your requirements such as blockchain development companies, healthcare app developers, and more. Our experts prepare these reports after thorough market research to ensure you have nothing but only the best potential tech partners at your disposal.

By Manish

Content Strategist at MobileAppDaily

With a mixture of literature, cinema, and photography, Manish is mostly traveling. When he is not, he is probably writing another tech news for you!