Hello everyone, Hưng here!
When you first step into Binance, you must have seen names like USDT, USDC, FDUSD appear everywhere. Do you wonder what they are? Why don't we just use USD or VND for convenient trading?
Today, we will explore the "silent" yet most powerful player in the Crypto market: Stablecoin.
1. What is Stablecoin? (Simplest Understanding)
The Crypto market is famous for being "sunny in the morning and rainy in the afternoon". Bitcoin can rise 10% today but drop 15% tomorrow. So how do we preserve asset value when we don't want to bear that volatility risk?
👉 The answer is Stablecoin.
True to its name ("Stable" = Stable), these are types of cryptocurrencies designed to maintain a fixed value, often pegged to the US Dollar (USD).
A simple example: Imagine the Crypto market as a Casino. You cannot use cash directly to place bets. You have to exchange cash for Chips.
Here: 1 Chip = 1 USD. Whether you win or lose in games, the value of that chip is always 1 USD. Stablecoins are those "chips" in the digital world.
2. Why Do We Need Stablecoin?
If it doesn't increase in price, then what is the point of holding it? Here are 3 "survival" uses of Stablecoin:
✅ The Bridge (Trading):
Most trading pairs on the exchange are pegged to stablecoins (e.g., BTC/USDT, ETH/FDUSD). It is the common currency for buying and selling everything.
✅ Shelter (Most important!):
When the market predicts a big storm (strong downtrend), you cannot instantly withdraw to bank cash.
At this point, the wise action is to sell volatile coins (like BTC, ETH) into Stablecoin (USDT).
👉 Purpose: To preserve your capital from "evaporating" with the market's downturn. When the storm passes, you use that Stablecoin to buy back more coins at a lower price.
✅ Passive Income Earning Tool:
You can save Stablecoins on Binance Earn (similar to saving at a bank) to earn quite attractive interest rates (usually higher than traditional bank USD interest rates) while waiting for investment opportunities.
3. Familiar Faces on Binance
You will often encounter these 3 names:
• USDT (Tether): The most popular "big brother" in the market, with the highest liquidity.
• USDC (Circle): Rated as more transparent and legally compliant.
• FDUSD: A newly emerging stablecoin often favored by Binance for transaction fees.
⚠️ Note from Hưng: Never "invest" in Stablecoins hoping they will double or triple in price. Their value only hovers around $1. They are a tool to hold money, not to multiply money (unless earning interest).
🔥 CONCLUSION FROM HƯNG:
Stablecoins may be boring because they don't "fly high", but they are a solid foundation for this entire market. Knowing how to use Stablecoins as a refuge is a vital skill for a professional investor.
What type of Stablecoin do you hold the most in your wallet?
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