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<ul class="summary-list"><li><keyword id="11931190" type="UNKNOWN" weightage="60" keywordseo="stablecoins" source="Orion">Stablecoins</keyword> are cryptocurrencies that are designed to maintain a stable price over time.</li><li>Stablecoins are often pegged to fiat currency, such as the US dollar, and backed by collateral. </li><li>People primarily use stablecoins on DeFi platforms and to hold money within the crypto ecosystem.</li></ul> <ul class="summary-list"></ul>While <a href="https://www.businessinsider.com/what-is-cryptocurrency" target="_blank" rel="noopener">cryptocurrencies</a> and the crypto ecosystem may present interesting and rewarding opportunities, many cryptocurrencies are extremely volatile. You might not want to spend a <a href="https://www.businessinsider.com/buy-bitcoin" target="_blank" rel="noopener">bitcoin</a> if you think its price could increase 10-fold within a year. Or you may not want to borrow a <keyword id="11892695" type="UNKNOWN" weightage="60" keywordseo="cryptocurrency" source="Orion">cryptocurrency</keyword> that's value could drop after you receive the funds. Additionally, it can be difficult and costly to move money between traditional financial systems and cryptocurrency networks. Stablecoins help crypto users address both of these concerns.<h2>What are stablecoins?</h2>As the name implies, stablecoins are cryptocurrencies that are designed to offer stability within a cryptocurrency system. They're often pegged (i.e., have a fixed exchange rate) to a fiat currency, such as the US dollar. "In an ecosystem like cryptocurrencies, where volatility is typically high, this is an important property," says Paul Brody, principal and global blockchain leader at <a href="https://blockchain.ey.com/" target="_blank" rel="noopener">Ernst &amp; Young</a>. "If you want to take advantage of <a href="https://www.businessinsider.com/what-is-blockchain" target="_blank" rel="noopener">blockchain technology</a> without exposing yourself to the volatility in crypto prices, this is the way to do it." For example, one USD Coin (USDC) is intended to always be worth $1. While the dollar's <a href="https://www.businessinsider.com/purchase-power" target="_blank" rel="noopener">purchasing power </a>could change over time, it's much less volatile than cryptocurrencies. There are also stablecoins that are pegged to a commodity, such as <a href="https://www.businessinsider.com/how-to-invest-in-gold" target="_blank" rel="noopener">gold</a> or oil, but fiat-pegged stablecoins are currently the most popular options. <h2>How do stablecoins work?</h2>A stablecoin's pegged value is what makes it useful within the world of crypto. But that's possible only if coin holders can be assured they'll be able to cash out their stablecoins. To ensure this can happen, stablecoin creators hold onto reserves of other currencies or assets. "This is called collateralization," explains Stephen Stonberg, CEO of <a href="https://bittrex.com/" target="_blank" rel="noopener">Bittrex Global</a>, a cryptocurrency trading platform. "Apart from being tied to another asset, collateralization also includes the buying and selling of affiliated assets through algorithmic mechanisms."For instance, a stablecoin issuer may promise to hold $1 in a bank account for each of the cryptocurrency coins it creates. As long as the collateral - or reserves - are available, coin holders know that they'll be able to exchange a coin for $1. However, there's a risk that the stablecoin issuer doesn't actually have enough reserves.Government agencies have discussed ways to regulate stablecoins, and have taken action against organizations that may have misrepresented their reserve holdings. And stablecoin issuers may share some details about what and where they're holding their reserves.In the news: The issuers of the <a href="https://markets.businessinsider.com/news/currencies/tether-stablecoin-crypto-circle-gemini-usd-coin-2021-07" target="_blank" rel="noopener">tether token</a> (USDT), one of the most widely used stablecoins, were fined $41 million in October 2021 for allegedly misrepresenting that they had held the proper amount of US dollars in reserve to back their tokens. Still, if you're considering buying stablecoins, a lack of proper reserves is one potential risk to be aware of. "In my view, the only really acceptable answer is with an independent audit," says Brody. "Not only do you need to know what assets are backing a particular token, if it's an asset-backed token, but you also need the assurance that those assets are not pledged against other liabilities." <h3>Two common approaches to stablecoin collateral </h3>Stablecoin issuers can choose how they want to hold the collateral for their stablecoins in reserves. The specifics vary depending on the stablecoin, but most fall into two categories:<ul><li>Off-chain or asset-backed collateral. Asset-backed stablecoins maintain reserves in non-blockchain assets. The safest options may be those that hold fiat currency in regulated accounts. But some may hold commodities, such as <a href="https://www.businessinsider.com/how-to-buy-gold" target="_blank" rel="noopener">gold</a>, in reserve. Or some keep part of the funds in fiat currencies and invest the rest of the collateral. "There's a bit more risk here because major price changes in those assets could threaten the ability of token-holders to cash out," says Brody. </li><li>On-chain or crypto-backed collateral. Crypto-backed stablecoins use cryptocurrencies as collateral. You can deposit and lock other cryptocurrencies to create these stablecoins, and they're generally over-collateralized to account for volatility. For instance, the stablecoin DAI is pegged to the USD (one DAI equals $1). But you could have to lock up $150 worth of <a href="https://www.businessinsider.com/what-is-ethereum" target="_blank" rel="noopener">ether</a> (ETH) to create $100 worth of DAI. </li></ul>"Another variation of stablecoins are on-shore and off-shore stablecoins," says Stonberg, a reference to whether the stablecoin issuers keep the reserves within our outside the US, which could impact regulatory oversight. "Ultimately, there will be a market for both types of stablecoins."Quick tip: While creating crypto-backed stablecoins may require over-collateralization, you can swap cryptocurrencies for stablecoins or <a href="https://www.businessinsider.com/how-to-buy-cryptocurrency" target="_blank" rel="noopener">buy stablecoins</a> through an exchange. Because new stablecoins aren't being created - they're only changing hands - you don't need to offer additional cryptos or payment. There's another type of stablecoin that doesn't have any collateral. Instead, they use automated algorithms to try to create or decrease supply and hold a steady price. However, these algorithmic or "seigniorage-style" stablecoins haven't caught on. <h2>How do people use stablecoins? </h2>Stablecoins are primarily used in two ways. First, you might want to keep money in the cryptocurrency system, but you don't think it makes sense to invest in bitcoin (or a different cryptocurrency) right now. Holding the funds in a stablecoin could limit your risk. It's a bit like keeping cash in a <a href="https://www.businessinsider.com/what-is-a-brokerage-account" target="_blank" rel="noopener">brokerage account</a> while waiting to make an investment.The other and perhaps more popular way that people use stablecoins is to participate in decentralized finance (DeFi) projects, such as crypto lending and borrowing platforms. Minimizing the volatility risk for users could make it easier to understand the cost (or profit) that can come from these transactions. "For most companies and individual users, the ability to use stablecoins to manage risk while accessing DeFi and other online services is going to be the key value proposition and it's certainly what our enterprise users are interested in," says Brody. <h2>The financial takeaway</h2>For individuals and institutions alike, stablecoins let people stay in the crypto world without the risk that's commonly associated with cryptocurrencies. In Stonberg's eyes, "what's unique and important about stablecoins is they represent the bridging of two worlds - cryptocurrencies and traditional finance." However, if you're considering buying stablecoins or using them to lend or borrow money through a DeFi platform, know that there's still risk involved. Asset-backed stablecoins might not actually hold enough assets to fully collateralize their outstanding coin balance. And even if they're over-collateralized, crypto-backed stablecoins could run into trouble if other cryptos experience major downswings.<a data-type="610ae71ab0b35f330c4d0734">Altcoins are the alternative digital currencies to bitcoin - here's what they are and how they work</a><a data-type="611446ec37043a480114bb24">What to know about non-fungible tokens (NFTs) - unique digital assets built on blockchain technology</a><a data-type="6140c7ba4dde6127641ef2ec">What to know about staking - the process of locking up crypto holdings to earn rewards and interest</a><a data-type="600f72e1fdb68e08982d5365">A bitcoin IRA lets you profit from the cryptocurrency's potential gains in a tax-advantaged way</a>

Stablecoins: What to know about the digital coins designed to ease volatility in crypto investing

<ul class="summary-list"><li>Regulators are training their sights on <keyword id="2762594" type="PERSON" weightage="60" keywordseo="tether">tether</keyword>, the biggest of the dollar-pegged <keyword id="2420795" type="PERSON" weightage="60" keywordseo="cryptocurrencies">cryptocurrencies</keyword> known as stablecoins. </li><li>But even as tether's legal troubles ratchet up, the <keyword id="7616853" type="UNKNOWN" weightage="60" keywordseo="Stablecoin">stablecoin</keyword> has already seen market share decline.</li><li>What tether does behind the scenes has become a central focus.</li></ul>In 2018, Jeff Bezos <a href="https://www.businessinsider.com/jeff-bezos-interview-axel-springer-ceo-amazon-trump-blue-origin-family-regulation-washington-post-2018-4">told Insider</a> that innovators "have to be willing to be misunderstood." So when Stuart Hoegner, the top lawyer at <a href="https://markets.businessinsider.com/currencies/usdt-usd">tether</a>, began an indignant blog <a href="https://stuarthoegner.medium.com/">post</a> in May citing Bezos, it suggested he saw his product as the unfairly maligned bleeding edge of a <keyword id="2721952" type="PERSON" weightage="60" keywordseo="crypto">crypto</keyword> revolution.Others aren't so sure. Regulators are training their sights on tether, the biggest of the dollar-pegged cryptocurrencies known as stablecoins. On Monday, reports circulated that the DOJ was eyeing a <a href="https://markets.businessinsider.com/news/currencies/tether-criminal-probe-usdt-stablecoin-investigation-federal-doj-crypto-2021-7">criminal bank fraud case</a> against tether execs' conduct years ago. The next day, further <a href="https://www.bloomberg.com/news/articles/2021-07-27/tether-facebook-coin-spur-worry-at-yellen-s-closed-door-meeting">reports</a> indicated a presidential committee led by Treasury Secretary Janet Yellen was homing in on tether, likening it to an unregulated money-market fund - the kind which caused <a href="https://www.wsj.com/articles/money-market-funds-buckled-in-two-crises-in-a-row-regulators-look-to-fix-them-again-11626687001">financial turmoil</a> during the 2008 crisis and again when COVID-19 rattled <keyword id="31671" type="CITY" weightage="100" keywordseo="markets">markets</keyword>.But even as tether's legal troubles reach an apex, the stablecoin has in some ways become less relevant. So far this year, tether's share of the overall stablecoin supply has tumbled from 75% to 57%, according to <a href="http://www.theblockcrypto.com/data/decentralized-finance/stablecoins/share-of-total-stablecoin-supply">data</a> from The Block. Behind the decline are new challengers, including <keyword id="18262" type="PERSON" weightage="60" keywordseo="circle">Circle</keyword>'s <keyword id="9825992" type="COMPANY" weightage="60" keywordseo="usd-coin">USD Coin</keyword>, <a href="https://markets.businessinsider.com/news/currencies/binance-ceo-regulatory-compliance-expertise-replacement-succession-changpeng-zhao-2021-7">Binance</a> USD, Gemini, and <a href="https://markets.businessinsider.com/news/currencies/crypto-ethereum-defi-yield-farming-mark-cuban-iron-titan-2021-07">DeFi</a>-focused Dai.The problem for tether is that the technological barriers around its stablecoin business are not very high.All the various US dollar-backed stablecoins "are not that different in terms of what they're representing," Denelle Dixon, CEO and executive director of the Stellar Development Foundation, told Insider. Stellar <a href="https://news.bitcoin.com/circle-launches-usd-coin-stellar-network/">hosts</a> USD Coin on its network."But the companies that support those tokens and what they do behind the scenes is really important," she added.And what tether does behind the scenes has become a central focus. Alongside the recent bank fraud allegations, past issues with its parent company's misconduct have dogged tether, leading New York state to <a href="https://ag.ny.gov/press-release/2021/attorney-general-james-ends-virtual-currency-trading-platform-bitfinexs-illegal">ban trading</a>. Moreover, there are two sets of complaints about the stablecoin itself: the quality of its reserves and transparency.First, regulators worry that tether's reserves - which in principle should back each tether with one dollar - could be of dubious quality. After the company released a reserves breakdown this year, JPMorgan <a href="https://www.ft.com/content/342966af-98dc-4b48-b997-38c00804270a">estimated</a> that its $30 billion in commercial paper, a cash-like type of short-term corporate debt, would make tether one of the world's biggest investors in the asset.Yet unlike <a href="https://am.jpmorgan.com/us/en/asset-management/adv/products/jpmorgan-prime-money-market-fund-morgan-4812a2702#/portfolio">other</a> massive commercial paper holders, tether does not disclose the make-up of what it owns. Hoegner <a href="https://www.youtube.com/watch?v=ZBEqyiO35cQ">told CNBC</a> his company's holdings included international paper - leading anchor Jim Cramer to <a href="https://www.youtube.com/watch?v=p1wzC8ozaDc">speculate</a> tether could be a "ticking time bomb" holding default-prone Chinese paper. A recent academic <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3888752">paper</a> suggested tether could be subject to bank runs, where the company is unable to meet a wave of dollar redemptions.Second, <a href="https://www.coindesk.com/tethers-report-card-offers-less-detail-than-rivals">some</a> think tether's disclosures, which were recently beefed up, are still insufficient. The company has not yet produced a full independent audit, though Hoegner told CNBC that one was "months away, not years." It has, however, produced an independent "<a href="https://tether.to/wp-content/uploads/2021/04/tether-assurance-mar-2021-2.pdf">attestation</a>" - essentially verification that tether's balance sheet is what the company says. Tether has <a href="https://stuarthoegner.medium.com/tether-is-setting-a-new-standard-for-transparency-and-responding-to-criticism-that-is-fc130e08319b">disputed or denied</a> the accusations against it. It says its commercial-paper holdings are highly rated, it has plenty of cash to cover redemptions, and its disclosure efforts are setting a "new industry standard for transparency." "It's a classic entrepreneur's dilemma," Sadie Raney, CEO of crypto hedge fund Strix Leviathan, told Insider. Firms operating in scantily regulated industries, like tether, must choose whether to plow ahead and risk blowback or take it slow and give up market share, she said.For Raney, who also co-founded the SEC-registered crypto robo-advisor Makara, using tether is too risky when her business relies on a government green light. "If we utilize a stablecoin, we do not use tether, [although] we have in the past," said Raney, whose company now uses Gemini. "The regulatory uncertainty with tether was what kept us from continuing to use it."Not everyone is deterred, though. Valkyrie CIO Steven McClurg told Insider that tether's public attestation helped soothe some of his prior fears, saying its publication has been "really good for the industry.""I don't think there are really any concerns anymore," he added.

Tether was once the stablecoin king. Now its dominance is threatened by newcomers and legal uncertainty.

<ul class="summary-list"><li>Alameda Research liquidated $1.7 million worth of cryptocurrencies over the past 24 hours. </li><li>Data showed that wallets associated with Alameda unloaded Ethereum-based tokens, which were later swapped for bitcoin.</li></ul>Alameda Research sold roughly $1.7 million worth of cryptocurrencies in the past 24-hours amid bankruptcy proceedings for Sam Bankman-Fried's collapsed empire.The firm, which served as a crypto hedge fund, sold mostly Ethereum-based tokens including curve, ether, dai and USD Coin. The coins were consolidated into two wallets before being sold for the stablecoin Tether and ultimately traded for bitcoin, according to data from Arkham Intelligence cited by <a href="https://www.coindesk.com/markets/2022/12/29/alameda-research-liquidated-ether-based-token-holdings-for-bitcoin-in-past-24-hours-on-chain-data-shows/" target="_blank" rel="noopener">CoinDesk</a>. <a href="https://twitter.com/ArkhamIntel/status/1608204990581202946" target="_blank" rel="noopener">Arkham said in a Twitter thread</a> that wallets linked to Alameda Research were dormant up until Wednesday, with the last prior transaction occurring on December 1. They began trading again on Wednesday and sent the cryptos to mixing services to swap the cryptos."If this was a rogue employee or some kind of breach, it was rather extensive," Arkham tweeted.The sales come as creditors, customers and suppliers of Bankman-Fried's businesses jockey to be first in line to be paid out in bankruptcy. Alameda Research currently holds $112 million worth of cryptocurrencies, CoinDesk says, a decline from $140 million in holdings in November. Meanwhile, Bankman-Fried is under house arrest in California after being charged with fraud over mishandling client funds in conjunction with the collapse of FTX. He is slated to appear in a New York federal court on January 3 and has denied criminal liability since stepping down as CEO of FTX last month.

Sam Bankman-Fried's Alameda Research sells $1.7 million in crypto amid bankruptcy and still holds over $112 million in tokens

What is cryptocurrency? What to know about this increasingly popular digital currency before investing

<ul class="summary-list"><li><keyword id="11896271" type="UNKNOWN" weightage="60" keywordseo="ether" source="Orion">Ether</keyword> beat <keyword id="11893902" type="UNKNOWN" weightage="60" keywordseo="bitcoin" source="Orion">bitcoin</keyword> as the most-donated <keyword id="11893898" type="UNKNOWN" weightage="60" keywordseo="crypto" source="Orion">crypto</keyword> in 2021 with $30.79 million in donation volume.</li><li>The data was released Wednesday by <a href="https://thegivingblock.com/annual-report/ar21/">The Giving Block</a>, a crypto philanthropy platform for organizations and individuals.</li><li>Bitcoin was the second most donated crypto, followed by USD Coin.</li></ul>Ether beat bitcoin as the most-donated cryptocurrency in 2021 with $30.79 million in donation volume, according to data from <a href="https://thegivingblock.com/annual-report/ar21/">The Giving Block</a>, a crypto philanthropy platform for organizations and individuals.Bitcoin — historically the crypto with the highest annual donation volume — came in second last year with $25.88 million. Stablecoins were also gifted a lot, according to The Giving Block's year-end report released Wednesday. In sum, 85% of all donation volume was comprised of bitcoin, ether, and USD coin.<table style="border-collapse: collapse; width: 100%; height: 132px;" border="1"><tbody><tr style="height: 22px;"><td style="width: 50%; height: 22px;">Cryptocurrency</td><td style="width: 50%; height: 22px;">Amount donated</td></tr><tr style="height: 22px;"><td style="width: 50%; height: 22px;">Ethereum</td><td style="width: 50%; height: 22px;">$30,794,056</td></tr><tr style="height: 22px;"><td style="width: 50%; height: 22px;">Bitcoin</td><td style="width: 50%; height: 22px;">$25,885,974</td></tr><tr style="height: 22px;"><td style="width: 50%; height: 22px;">USD Coin</td><td style="width: 50%; height: 22px;">$4,739,117</td></tr><tr style="height: 22px;"><td style="width: 50%; height: 22px;">Dai</td><td style="width: 50%; height: 22px;">$2,247,258</td></tr><tr style="height: 22px;"><td style="width: 50%; height: 22px;">Flow</td><td style="width: 50%; height: 22px;">$1,407,000</td></tr></tbody></table>The platform saw people donate more than 70 cryptos as more options were added throughout the year. For instance, meme token shiba inu was introduced in November and a month later was already the fourth-most donated crypto.For the year, the total donation volume soared 1,558% compared to the previous year to $69.6 million. The average crypto donation size stood at $10,455, a 236% jump from 2020. The platform attributed the increased giving to three factors: the crypto market's bull run performance, which resulted in the appreciation of many crypto assets; the diversity of assets donated, which reflected the evolution of the digital asset ecosystem; and the deadline to be eligible for the tax benefits of donating crypto.Nonprofits also became more open to accepting digital assets. The Giving Block said more than 1,000 organizations were accepting cryptos by the end of 2021. "Many nonprofits have looked to cryptocurrency as the next logical step in fundraising innovation," the report said. "For several organizations, crypto philanthropy addresses the more specific challenge of creating sustained, meaningful engagement with younger donors, and taps into a powerful tax incentive to donate."Non-fungible token projects also donated $12.3 million in 2021, emerging as a major force in charitable crypto giving. One gift was valued at $3.5 million at the time of the donation, the report said.Founded in 2018, The Giving Block is an organization that aims to promote crypto philanthropy. The platform currently enables more than 1,000 organizations, charities, universities, and faith-based organizations of all sizes to accept crypto donations.

Ether beat bitcoin as the most donated cryptocurrency for the first time in 2021, data shows

<ul class="summary-list"><li><keyword id="219358" type="PERSON" weightage="60" keywordseo="Mark-Cuban">Mark Cuban</keyword> said he got hit by losses in <keyword id="6359357" type="COMPANY" weightage="60" keywordseo="titan">Titan</keyword>, a token that crashed to $0 from $60 on Thursday.</li><li>It reportedly crashed as whale accounts unloaded their shares and triggered panic selling.</li><li>"I got hit like everyone else," Cuban tweeted. <a href="https://www.businessinsider.com/?hprecirc-bullet"></a></li></ul>The billionaire investor Mark Cuban said he traded a DeFi token that crashed to zero in one day.The token, known as the Iron Titanium Token, or Titan, was part of <keyword id="11465657" type="UNKNOWN" weightage="60" keywordseo="iron-finance">Iron Finance</keyword>, an algorithmic-stablecoin project.On Thursday, Titan plunged to nearly zero from about $60 as large whale accounts dumped their holdings and triggered panic selling, <a href="https://www.rekt.news/iron-finance-rekt/">Rekt News said</a>.Cuban <a href="https://twitter.com/mcuban/status/1405306497257586688?s=20">tweeted</a> that he'd gotten hit by the token's massive slide. "I got hit like everyone else," he said. "Crazy part is I got out, thought they were increasing their TVL enough. Than Bam."It wasn't clear how much money Cuban lost or when he exited his trade. He <a href="https://www.bloomberg.com/news/articles/2021-06-17/mark-cuban-defi-iron-finance-crashed-100?sref=vuYGislZ">told Bloomberg News</a> that Titan made up a small percentage of his crypto portfolio but enough that he "wasn't happy" about the trade.The billionaire investor mentioned Titan in a <a href="https://blogmaverick.com/2021/06/13/the-brilliance-of-yield-farming-liquidity-providing-and-valuing-crypto-projects/">blog post</a> on Sunday titled "The Brilliance of Yield Farming, Liquidity Providing and Valuing Crypto Projects."In the post, he said he was a liquidity provider for QuickSwap, a decentralized exchange platform:"I provide 2 different tokens (DAI/<a href="https://www.livecoinwatch.com/price/IRONTitaniumToken-_TITAN">TITAN</a>) that enable Quikswap to offer swaps between these two tokens. <a href="https://info.quickswap.exchange/pairs">As you can see here</a>, this pair is one of many, and you can also see that based on the .25 pct of volume in this swap that Quickswap pays, my return on my initial <a href="https://info.quickswap.exchange/pair/0xc0e5f9a20e114fbcc93c5d643127b9388b849b4a">$75k investment</a> (based on fees only) as of this writing, is an annualized return of about 206% (Based on the fees earned in the last 24 hours. This return percentage will vary all over the map depending on the activity.) But the cool thing is while I don't get any extra rewards for this pair (you reading this Titan and Quickswap ???), I am currently the only LP in this pool, so I get 100pct of the fees. In every pool, the LPs, get a percentage of the fees based on the percentage of the liquidity they provide."So in exchange for providing the Liquidity both TITAN and Quickswap need for their businesses, I get .25 of the transaction volume for swaps between these two tokens. As long as I keep making a good return, I will keep my money invested (Volatility can create mark to market losses). If not, I can immediately withdraw it (some platforms have a hold period or penalties) . Have enough LPs and the exchange is far more capital efficient than a similar traditional exchange business and i get to make some money."Cuban told Bloomberg News that there should be regulation to define what a stablecoin is and what collateralization is acceptable."Even though I got rugged on this, it's really on me for being lazy. The thing about de fi plays like this is that its all about revenue and math and I was too lazy to do the math to determine what the key metrics were," Cuban said in an email to Bloomberg."But if you are looking for a lesson learned , the real question is the regulatory one. There will be a lot of players trying to establish stable coins on every new l1 and L2. It can be a very lucrative fee and arb business for the winners."Cuban did not immediately respond to Insider's request for comment.

Mark Cuban says he lost money trading a DeFi token called Titan that crashed from $60 to zero in one day

<ul class="summary-list"><li><keyword id="6354947" type="General" weightage="60" keywordseo="bitcoin" source="Orion">Bitcoin</keyword> may be the most know <keyword id="6357017" type="DEFINITION" weightage="60" keywordseo="cryptocurrency" source="Orion">cryptocurrency</keyword>, but there is a world of altcoins out there with their own specific uses. </li><li>Apart from currencies, these cryptoassets have various utilities from "<keyword id="11186908" type="General" weightage="60" keywordseo="proof-of-stake" source="Orion">proof of stake</keyword>" to decentralized finance.</li><li>Insider collected the most common types of <keyword id="2420795" type="PERSON" weightage="60" keywordseo="cryptocurrencies" source="Orion">cryptocurrencies</keyword> and 15 examples from a wide world of digital assets. </li></ul>Investing in cryptocurrencies has been synonymous with investing in bitcoin, especially for those new to the digital asset space. <a href="https://markets.businessinsider.com/currencies/btc-usd">Bitcoin</a>, after all, is often regarded as the first modern <a href="https://wazirx.com/signup?invite=2kpah6gr&amp;utm_source=business-insider&amp;utm_medium=referral&amp;utm_campaign=article-editorial">cryptocurrency</a>, founded by an anonymous developer under the pseudonym Satoshi Nakamoto in 2009. "We think bitcoin had the first-mover advantage," Ian Balina told Insider. Balina is the founder and CEO of <keyword id="6937186" type="General" weightage="60" keywordseo="token" source="Orion">Token</keyword> Metrics, a data-driven investment research platform for cryptocurrencies. Today, bitcoin boasts of a $1 trillion dollar market capitalization and enjoys the support of 22 public companies, according to <a href="https://www.coingecko.com/en/public-companies-bitcoin">data by CoinGecko</a>. These include major firms from <a href="https://markets.businessinsider.com/currencies/news/michael-saylor-microstrategy-buys-15-million-of-bitcoin-btc-2021-4-1030274270">MicroStrategy</a> to <a href="https://markets.businessinsider.com/currencies/news/tesla-bitcoin-price-holdings-grew-2-billion-tsla-btc-2021-4-1030358711">Tesla</a>. Not included in that number are major corporations adopting bitcoin such as <a href="https://markets.businessinsider.com/currencies/news/goldman-sachs-restarts-crypto-trading-and-will-begin-trading-bitcoin-futures-report-2021-3-1030137170">Goldman Sachs</a>, <a href="https://markets.businessinsider.com/currencies/news/bitcoin-bny-mellon-transacting-cryptocurrency-market-btc-bank-investment-management-2021-2-1030073231">Bank of New York Mellon</a>, and <a href="https://www.businessinsider.com/more-companies-accepting-bitcoin-cryptocurrency-paypal-starbucks-2021-4">PayPal</a>. <a href="https://markets.businessinsider.com/currencies/eth-usd">Ether</a> comes in at a close second. The global and open-source platform for decentralized applications that runs on the ethereum blockchain, is the runner-up to bitcoin with a valuation of $318 billion. Many analysts predict it will <a href="https://markets.businessinsider.com/currencies/news/ether-versus-bitcoin-price-crypto-analysis-experts-why-2021-4-1030358382">surpass the king of cryptocurrencies</a> down the road, citing <keyword id="6709758" type="General" weightage="60" keywordseo="Ether" source="Orion">ether</keyword>'s ability in storing computer codes that power contracts and applications. Beyond these two, there is a wealth of <a href="https://wazirx.com/signup?invite=2kpah6gr&amp;utm_source=business-insider&amp;utm_medium=referral&amp;utm_campaign=article-editorial">crypto assets</a> in the nascent space all with different utilities. "We're thrilled about the growing adoption of crypto beyond bitcoin," Greg King, CEO of Osprey Funds, a crypto asset manager that launched Osprey Bitcoin Trust, told Insider. "Investor and market appetite continues to grow for funds providing access to some of the most exciting coins and tokens." While cryptocurrencies are difficult to separate into neat and comparable categories, London-based fintech entrepreneur Viktor Prokopenya said the underlying popularity metrics can be borrowed from more traditional asset analysis. He named market capitalization, price volatility, and momentum as examples. "I believe we will see an increasing disregard for traditional portfolio theory and a reduction in diversification by many retail investors," he told Insider. "Of course, this could work out for the better but conventional prudence is advised." Insider, with the help of experts, lists here the five most common types of crypto uses with 15 examples of coins from across the space. <h3>1. Currencies </h3>This is the most commonly known utility of cryptocurrencies. Several companies have allowed the purchase of their products using cryptocurrencies such as <a href="https://markets.businessinsider.com/currencies/news/2-reasons-buying-tesla-with-bitcoin-bad-idea-2021-3-1030247584">Tesla car,</a> while <a href="https://markets.businessinsider.com/currencies/news/mark-cubans-dallas-mavericks-will-accept-dogecoin-for-tickets-2021-3-1030151539">dogecoin can be used to buy Dallas Mavericks' tickets and merchandise</a>. Other currency examples are <a href="https://litecoin-foundation.org/businesses/">litecoin</a> and <a href="https://www.egifter.com/buy-gift-cards-with-bitcoin-cash">bitcoin cash</a>. <h3>2. Stablecoins </h3>A stablecoin is a type of cryptocurrency that is backed by a reserve, which could be a cryptocurrency, a fiat currency, or a commodity. For instance, <a href="https://markets.businessinsider.com/currencies/usdt-usd">tether</a> is pegged to the US dollar. USD coin-created by Coinbase and Circle-and dai are also both pegged to the American currency. <h3>3. Proof of Stake </h3>This is a mechanism that regulates the process of transactions between users, ensuring that these are verified and added to a blockchain's public ledger. PoS was born out of another popular algorithm, Proof of Work. Both have the same goal of reaching consensus in the blockchain, <a href="https://academy.binance.com/en/articles/proof-of-stake-explained">Binance Academy explained</a>, and only differ in the process. Examples of cryptocurrencies that use PoS are ether (decentralized applications), <a href="https://markets.businessinsider.com/currencies/ada-usd">cardano</a> (academic research), and solana (blockchain applications). Read more: <a href="https://www.businessinsider.com/crypto-arbitrage-trading-strategy-alameda-research-sam-bankman-fried-billionaire-2021-4" target="_blank">A 29-year-old self-made billionaire breaks down how he achieved daily returns of 10% on million-dollar crypto trades, and shares how to find the best opportunities</a> <h3>4. Decentralized Finance </h3>Also known as <a href="https://www.businessinsider.com/how-to-invest-defi-bitcoin-crypto-cio-launches-new-fund-2021-2?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingestm=ingest" target="_blank">DeFi</a>, this is an umbrella term for various applications that use public blockchains and crypto assets to disrupt the traditional financial sectors. DeFi is an alternative to a system that is tightly controlled and held together by decades-old infrastructure, according to a <a href="https://ethereum.org/en/defi/">website funded by the Ethereum Foundation</a>. DeFi, an industry now worth <a href="https://defipulse.com/" target="_blank">over $66 billion,</a> is a major reason for ether's recent record-breaking week during the end of April. Other cryptocurrencies that use DeFi applications according to Balina are: uniswap, a decentralized exchange for trading ethereum-based tokens via an automated order book; chainlink, a decentralized oracles network for bringing off-chain data onto the blockchain; and aave, a decentralized lending platform. "In the last few years, we have seen DeFi also take up a significant spot within any listing category," Ben Weiss, CEO of bitcoin ATM operator CoinFlip, told Insider - adding that many factors remain to be seen after the <a href="https://www.coindesk.com/ethereum-improvement-proposal-1559-london-hard-fork">London upgrade in June</a>. Weiss continued: "I would expect the DeFi space to grow as the momentum of both DeFi usage as well as innovation is growing in the billions of dollars every other day. Decentralized market makers like uniswap and pancakeswap changed what it means to be liquid and crypto accessibility in general." <h3>5 . Non-Fungible Tokens </h3>NFTs are <a href="https://markets.businessinsider.com/news/stocks/nfts-majority-americans-surveyed-digital-art-more-than-a-fad-2021-4-1030272455">unique digital assets</a> secured on a blockchain supported by ethereum. Each <keyword id="4668945" type="PERSON" weightage="60" keywordseo="nft" source="Orion">NFT</keyword> has its own signature, which can be verified in the public ledger and cannot be duplicated. When people buy NFTs, they gain the rights to the <a href="https://www.businessinsider.com/why-are-people-buying-nfts-investing-in-nft-crypto-art-2021-3?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingestm=ingest" target="_blank">unique token</a> on the blockchain, and not the <a href="https://markets.businessinsider.com/news/stocks/nft-art-market-rapid-growth-slowdown-non-fungible-tokens-2021-4-1030371073">artworks</a>, <a href="https://www.businessinsider.com/non-fungible-tokens-nfts-have-taken-over-heres-why-theyre-important-2021-4">collectibles</a>, or <a href="https://markets.businessinsider.com/currencies/news/cryptocurrency-market-trends-this-year-according-to-pwc-bitcoin-2021-3-1030255805">tweets</a> linked to the NFTs themselves. Many of these are built on ether, Osprey said, but flow, tezos, and algorand also support NFTs. "The potential applications of NFT technology are virtually endless," he added. Other examples are theta network (video streaming blockchain) and chiliz (sports industry).

You Searched For "dai stablecoin" and got 7 results

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