Introduction

Hello guys,
It feels so nice to be here again at the Steemit crypto academy in attendance of week 6. I read the lecture from the crypto professor @yohan2on where he lectured on Stable coins, the lecture was a great one and I will be solving the task associated with the lecture to certify that I understood the lecture.
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.

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.

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.

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.

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
Stable coins are cryptocurrency that has their price pegged to an outside asset, which can be U.S dollar or Gold/Silver with the purpose of price stability. 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.

It's important to mention here that USDT as a coin is used to trade whenever the trader wants to know the amount he or she will be receiving at the end of his or her transaction. The reason why most people trade using USDT is because of the stability of the coin. In conclusion, I will say that USDT is a coin that allows traders to keep track of their asset.

Features of USDT

• It gives quick access to the market.

• It is pegged to the U.S dollar by the company known as Tether Limited, to take care of cryptocurrency volatility (1USDT = $1).

• It can be used to buy other cryptocurrencies with actual worth expectant and with low
  commission.

• It allows exchanges to maintain a high degree of liquidity and protection against the high instability of cryptocurrencies.

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.

Is USDT tradable on exchanges?

The answer is yes. USDT is tradable on exchanges, these trade can be done on Spot or Margin or futures trading platform. Profits here are sure as there is no room for fluctuations of the coin.

Conclusion

I want to sincerely appreciate the professor in the person of @yohan2on for such a wonderful lecture delivery. From all said and down, we can conclude that stable coins were invented purposely to check cryptocurrencies price instability (volatility). This is because stable coins are pegged to a certain type of commodities like Fiat currencies, Gold or silver and any other crypto we can think of. Among other stable coins, USDT is one of the most widely used stable coins and its price is pegged U.S dollar, for this reason, the instability in crypto has reduced drastically.

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

Thanks for reading...