Difference Between Stablecoins and Bitcoin

As the world is evolving, thus people are becoming more intelligent acquiring intellectuality. Thus, humans keep on making modifications in order to make their economical life safe and secure. Hence, in this quest, the evolution of various kinds of cryptocurrencies or digital currencies came into being. In today’s scenario, various kinds of digital coins are present such as Bitcoins, Altcoins, Stablecoins, and many more.

Bitcoin is the cryptocurrency market’s king, and many exchanges accept bitcoin as a significant trade currency. Stablecoin is a new cryptocurrency similar to Bitcoin, except its value is fixed and not backed by any assets. Stablecoins are used in a variety of real-time industries and are increasingly taking bitcoin’s place in the cryptocurrency world. We’ll go over the main notion of Stablecoin vs Bitcoin and some noteworthy facts regarding stablecoins in this article.

Stablecoins vs Bitcoin

The main difference between Stablecoins and Bitcoin is that Stablecoins are meant to be more stable and less vulnerable to fluctuations in their market value. On the other hand, Bitcoins are highly vulnerable in their market values which keep on changing. The dynamic nature of Bitcoins makes them unfit for real-life transactions and use and also for business transactions as well.

Stablecoin’s value remains constant at $1.00. The value of Stablecoin fluctuates in predictable ways. Stablecoins are controlled by a single entity. Stablecoins’ price remains constant, making them non-volatile. Stablecoins are ideal for commercial transactions. The use of stablecoins is controlled. Stablecoins are used for real-world transactions and can be used for them as well.

Bitcoin is available for purchase at anything from $0.05 to $20,000. It’s hard to anticipate how Bitcoin’s value will fluctuate in the future. Bitcoins are a decentralized currency. Bitcoins have a lot of insecurity, which makes them extremely volatile. Bitcoins are not appropriate for commercial transactions. Bitcoins are decentralized and unregulated. Bitcoins are used for a variety of purposes, including exchange and trading, educated gambling, and payments.

Comparison Table Between Stablecoins and Bitcoin

Parameters of ComparisonStablecoinsBitcoins
Business TransactionsSuitableNot suitable
PredictionFluctuations can be predicted.Impossible to predict.
Value$1.00$0.05 to $20,000
StabilityStable and non-volatile.Not stable and highly volatile.
UseReal-life transaction and use.Exchange, gambling, trading, payments.
Source: Bloomberg

What are Stablecoins?

A stablecoin is the newest type of evolving cryptocurrency. It aims at providing price stability by using a reserve asset as a backer. Stablecoins have gained popularity since they are trying to combine the best of both worlds: privacy or security of cryptocurrencies’ payments and rapid processing. However, it also includes the volatility-free, stable prices of fiat currencies.

Despite being too popular, the values of Bitcoins keep on changing frequently. For example, it climbed from roughly $5,950 in November of last year to over $19,700 in December. Later it fell by over two-thirds to $6,900 in early February. Even its intraday price movements can be erratic. It’s not uncommon for the cryptocurrency to move more than 10% in either direction in a few hours. Bitcoin and other prominent cryptocurrencies are unsuitable for everyday use by the general public because of their high short-term volatility.

A currency should primarily serve as a medium of monetary exchange and a means of storing monetary value, with its value remaining relatively steady over longer periods. If users are unsure of its purchasing power tomorrow, they will not adopt it at any cost. A crypto coin’s purchasing power should be preserved, and inflation should be kept to a minimum. Encouraging the users should be done to spend rather than save their tokens. Stablecoins offer a way to create this perfect state of affairs.

What is Bitcoin?

Bitcoin belongs to the family of digital currencies.

A tremendous amount of computational power validates all bitcoin transactions. These digital type of currencies are neither backed nor issued by any financial institution or governments forums. Furthermore, they do not possess any monetary value. Even though Bitcoin is not legal tender, it has sparked the creation of hundreds of other cryptocurrencies known as altcoins.

The abbreviation for Bitcoin is “BTC.” The system of bitcoin consists of a network of computers, which are also called “miners” or “nodes”. A blockchain can be viewed as a collection of blocks in very systematic and metaphorical terms. Many people have higher investment plans and big businesses sometimes do their transactions via Bitcoins. The reason behind this is, a small change in value in either an increasing or decreasing way won’t affect them much.

Main Differences Between Stablecoins and Bitcoin

  1. The value of Stablecoin remains constant at $1.00. However, the price range of Bitcoin varies from $0.05 to $20,000.
  2. The fluctuations in the value of Stablecoin can be predicted. On the other hand, the trends in a change in the value of Bitcoin is impossible to predict.
  3. Stablecoins are centralised. On the other hand, Bitcoins are decentralised.
  4. The price of Stablecoins remains stable, hence non-volatile. However, there is a lot of instability in the case of Bitcoins, hence they are highly volatile.
  5. Stablecoins are suitable for business transactions. On the other hand, Bitcoins are not suitable for business transactions.
  6. Stablecoins are regulated. On the other hand, Bitcoins are unregulated.
  7. Stablecoins are used and can be used for real-life use and transactions as well. However, Bitcoins are used for exchange or trading, Educated gambling, payments, etc.