As soon as the crypto era started with the launch of Bitcoin in early 2009, analysts and cryptocurrency experts quickly noticed that they will soon start struggling with volatility issues. This became clear as soon as Bitcoin came out, and the fact that there is only a limited amount of BTC that will ever reach the market is the main reason for this issue.
Because of this, developers started searching for a solution to this issue, and what they came up with is what we now know as stablecoins. These are cryptocurrencies that are backed by traditional money. This makes their value immune to volatility issues, as one coin is typically backed by $1, or whatever other fiat currency that stands behind the coin.
The best-known stablecoin is arguably Tether (USDT), which is backed by the USD. However, throughout its history, Tether has had to face controversies such as whether or not all of its coins are actually backed. The company that issued the coin continued to claim that USDT is fully backed at all times, but they never provided insight into their bank accounts in order to confirm this. Over time, people became skeptical of Tether, and a lot of them started returning their coins to exchanges and Tether's own treasury in fear of holding coins that have no real value.
However, while the Tether dilemma continues even to this day, many believe that the idea behind the coin can work. Because of that, numerous stablecoins started appearing all over the world, and the market has over 50 projects right now, half of which are already in circulation. This is why we will review some of them today, and try to see what are the best alternatives to USDT.
1) NuBits (USNBT)
NuBits is a stablecoin that uses PoW, and it is considered to be the first stablecoin to achieve wide circulation. It was launched in September 2014. As a stablecoin, NuBits is backed by USD, and the idea behind it is that it can be sold if its price goes higher than $1, and bought back if the opposite happens. This is a pretty good strategy, and NuBits was making excellent moves for over 19 months after its launch. Unfortunately, in June 2016, its value dropped significantly, and it could not recover for over three weeks.
Coincidentally, this is where Bitcoin started recovering from its own crash that came after the hack of Mt. Gox, and investors dropped USNBT for the purpose of buying Bitcoin. Since nobody had expected that investors will simply lose interest in the coin, its managers were caught off-guard, and it took them three whole months to get NuBits to stabilize once more. After the market crashed again in 2018, USNBT followed simply due to the fact that it suddenly had more coins than it needed. These days, its price is barely $0.11, and there is not much hope that the coin will ever return to $1.
2) bitUSD (BITUSD)
Next, we have bitUSD, an asset belonging to BitShares. The coin was also launched in September 2014, on the same day as NuBits itself. This stablecoin operates under pretty much the same principles and has its own asset managers. It is among the longest-running stablecoins, but it has performed much better than NuBits throughout the years.
Its largest volatility issues never went beyond 10%, and the coin seems quite stable and glued to the USD. The only issue with it is that it can only be used by 2 exchanges — both of which only use BitShare's assets.
3) Dai (DAI)
DAI is a stablecoin based on Ethereum's network, and it is supposedly backed by collateral loans. This can include any Ethereum token that is well-traded and is decentralized. Furthermore, such tokens even allow their holders to vote on the best ways to stabilize DAI, and if their suggestion is deemed proper, they receive a reward for their contribution.
DAI is a stablecoin that represents a new, decentralized approach to governance, which has caused it to become one of the more stable stablecoin. It was launched less than a year ago, in late December 2017, and its market cap continues to grow on a regular basis.
4) TrueUSD (TUSD)
TUSD is among the younger coins on this list, and it was launched in March of this year. At the time of writing, it is Tether's largest competitor, despite the fact that it has a much smaller market cap. However, its popularity comes from the fact that it does everything that Tether has ever promised, and more, but it does it much better than USDT ever did.
TrueUSD is accountable, regularly audited, it can be converted to USD with ease, and it never gave investors any reason to doubt it. It is also based on Ethereum's network, which makes it perfect for obtaining other altcoins based on ETH blockchain. It can be found on as much as 28 different exchanges.
5) nUSD (NUSD)
nUSD is a stablecoin produced by Havven, a decentralized payment network. The coin was launched in July 2018, which makes it even younger than TUSD. Its goal is to allow users to make use of it in every-day transactions, which makes it different from most stablecoins, that simply wish to escape volatility problems.
NUSD can be generated by purchasing certain amounts of HAV coin and locking it in a smart contract. 80% of HAV serves as a collateral, while 20% creates new nUSD coins. The system is simple and promising, and while still young, this stablecoin has had no major issues as of yet.
6) White Standard (WSD)
Moving away from Ethereum-based stablecoins, we have White Standard, which is actually based on Stellar's network. This is a highly transparent coin, and pretty much everything regarding this currency is open for public inspection. It is backed by GBP, EUR, and USD. In addition, it can provide 3-second settlements thanks to the speed of Stellar's network.
While the coin is quite small and can only be used for trading on Stellarport exchange, it still offers numerous options, like its own wallet, a shop that sells “luxury items”, as well as payment processing services for merchants. Its volatility rate never goes beyond 5%-10%, which also makes it one of the most stable stablecoins.
7) Paxos Standard Token (PAX)
PAX is a stablecoin launched only a month ago, on September 28, 2018. Despite this, it is already a serious contender in the crypto world, and it aims to replace the hole left by Tether, along with other new stablecoins. It is regulated by New York's DFS, which means that it was designed to be used in serious business.
It was launched at just the right time to instantly draw the attention of investors, as this was the period when the controversy surrounding Tether was at its highest. It does a lot to protect its customers from bad management, and it provides regular audits, which is something that Tether never did. Paxos is also a coin based on Ethereum's network, and it is backed by a lot of influential individuals.
8) Gemini Dollar (GUSD)
Gemini Dollar is a coin that was launched less than a month ago, on October 6. It was being developed for quite some time, and it was made by the Winklevoss twins. Despite the fact that it has only been around for a few weeks, Gemini has attracted a lot of attention, and it can already be found on 15 exchanges.
This is a stablecoin with a lot of potential, and it is completely compliant with many different standards. Due to the Tether controversy, this stablecoin's price quickly jumped to $1.18. It still doesn't have a lot of units in circulation, but in time, it has the potential to become one of the leading stablecoins, according to experts.
9) USD Coin (USDC)
As we draw closer to the end of this list, we have the second-youngest stablecoin, USD Coin. This is a stablecoin introduced by Coinbase and Circle and is among the fastest growing cryptos ever to be released. Its backers are well-known and quite reputable, which has definitely played a part in this coin's popularity and success. It was launched on October 9, but it already entered partnerships with numerous exchanges.
This is also an Ethereum-based stablecoin, which makes its security and speed dependent on the ETH network. Furthermore, it also enjoys all the benefits that Ethereum's huge community has to offer. It only took this coin two weeks to get to top 60 cryptos by market cap. It is transparent, it has good management, and its reserves are regulated and kept by trusted financial institutions.
10) Huobi USD (HUSD)
The last and the youngest stablecoin on this list is HUSD. This is a coin launched only a week ago, on October 23. What makes it different from other stablecoins on this list is that it cannot be moved outside of Huobi exchange. instead, it serves as a pairing representative for TUSD, USDC, PAX, and GUSD on Huobi. If anyone deposits any of these stablecoins on Huobi, they will immediately be converted to Huobi USD.
In an event that somebody wants to cash out their HUSD, they can choose one of these stablecoins to retrieve their funds. This is all done free of any fees, which makes HUSD a perfect choice for switching between different stablecoins on Huobi exchange. The system is simple, but if any of these other stablecoins starts losing value, many expect Huobi to simply exclude it from this deal. While HUSD is limited to this purpose at the moment, it is still worth mentioning, as there are plans to provide it with new use cases in the future.