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Stable Coins

why will you use a stable coin if you were listening to my Ethan room? Uh, we were discussing this this a little bit, but let me go over real quick. What is a stable coin? So we have two of the most important or two of the largest, most popular stable coins, uh, what a stable coin, what were, what they’re basically trying to do, uh, hence this pay attention to work stable, right? So I’m gonna go over this little story right here again. So in 2010, someone bought two pizzas for 10,000 Bitcoins. At the time, these were worth $41 in today’s market. That’s millions of dollars. So imagine you, you bought a piece of pizza for 10,000 Bitcoins, and now those that like 10,000 Bitcoins would be a lot of money, right? You’d probably want to shoot yourself and look at your cause you wouldn’t even have the pizzas anymore. They’re long gone. Um, so what’s, what’s great about a stable coin is that they’re stapled, right? That’s they like, okay, so the U S D C U S D C is probably the most famous Fiat backed stable coin. It’s value is roughly a dollar and is backed by circle and Coinbase. Right. So we’ll go into my Coinbase. Right. And we’ll go to the dashboard. What is that? No. Where is it?

So I have some, um, no, where’s mine. Here we go. So what I did is I bought some of the coin, right? So what they’re saying is, instead of, so I mean, it’s almost the same. I mean, it doesn’t really make too much sense why you would do this, because if you’re going to convert your cryptocurrencies into a stable coin and it goes from zero to a million, right. You’re still going to lose. Right. But it’s saying that you don’t have to

Right. So you can speak, you can kind of, it’s almost like a loan. You can loan off your crypto to, to be able to buy everyday things with a stable coin. Right. So stable coins are global. And can we send over the area and that they’re easy to receive and send once you haven’t either on an account or at Coinbase account. So I can send some of this us dollar coin to Africa and, uh, in a split second. Right? And within minutes they can, they’ll have the, the money, whatever I send to them, um, demand for stable coins is high. So you can earn interest by lending yours. Make sure you’re aware of the risks before lending.


That’s interesting. I did not know. You could lend, lend out my coins. Uh, stable coins are exchangeable for E T H and other Ethereum tokens. Lots of dApps rely on stable coins. Stable coins are secured by cryptography, crypto Graffy, uh, cryptography. No one can afford transactions on your behalf. All right. That’s that’s nice. So there are a hundred stable coins available. Here are some to get you started. So again, we talked about the us dollar coin. The dye is probably the most famous decentral coin. Its value is roughly a dollar and it’s accepted widely across dApps. So here we go. Here are our top stable coins by market capitalization. Market capitalizations is the total number of tokens that existed multiplied by their value per token. This list is dynamic and the project and the product and the projects projects listed here are not necessarily endorsed by the Ethereum dock or basically they’re not endorsed by this company.

Okay. So they’re all clipped clickable. All right. Let’s look, let’s kind of just name these real quick. We got tether that us dollar coin by Nance USD dye pack. So standard husk D true USD, amble forth and S U S D. So the there, so this is like your American dollar. This is like your American dollar. This is your American dollar. This is the only one that honestly, I understand why this is one of the, the, one of the most popular it’s backed by something, right? So these are not back. These are backed by Fiat, which is basically nothing. This is at least backed by cryptocurrencies, how to get stable coins. So how to get these coins, you can pick the most stable coins on disinter exchanges. Uh, again, uh, so like a swap, you can buy a lot of, uh,


So again, you can borrow them, but you have to pay it back. So you’re basically getting a loan. So it’s kind of like credit card, uh, like get a credit card off of your crypto. I don’t know how to put this with your crypto speculations. You can borrow off of your money and then use your coins, your stable coins. So then if your crypto goes higher, you’re not missing out, but you still have to pay the loan. Right? So if you don’t have a cashflow, you’re going to eventually have to sell your coins. But if you have a cash flow, then it’s advantageous to do this because you get to keep your coins and your just borrow, and then you can pay it back. Right. But you have to remember, you need to be able to, to afford it. So with how that works with Ethereum is either from, if you just, if you hold your money with Ethereum, I mean, there’s, it’s more to it than just hold your money with Ethereum. You got to apply and get it all situated. But once you do that, then what you’re able to do is you’re able to gain 7%, uh, on your money. So if you have enough Ephraim and you’re only using your you’re only borrowing for daily usage, right? And your daily usage is not millions of dollars a day, but if you have enough saved and then your interest would be able to pay back its loan, right? So you could live basically for free off your interest. Um,

Yeah. Let’s look at the what’s. What does, what makes these

Okay, here we go. So Fiat backed basically an IOU for a traditional Fiat currency. You’re usually dollars, right? You use the Fiat currency on it to purchase a stable coin that you can later cash in and redeem for original currency. The pro’s safe against crypto volatility, changes in prices are minimal cons. These are centralized. Someone must issue. The tokens requires auditing to ensure a company has sufficient reserves, right?

Crypto backed. Uh, these table corns are backed by other crypto assets like ETH or ETH. Their price depends on the value of the underlying asset or collateral, which can be volatile because he takes value, can fluctuate. These stable coins are overcloud arise. And to ensure the price stays as stable as possible. This means it’s close. It’s closer to just to say that at $1 crypto back stable coin has an underlying crypto asset worth at least $2. So if the price of that, your drops more than, okay, so that’s, this is why I was saying the crypto makes sense. It’s kind of, if you understand the stock market a little bit, it’s kind of like an ETF, uh, on a commodity. So

They’re holding so much crypto, right? So if you have $1 it’s backed by, or if you have $1 in crypto, it’s backed by $2 in crypto stat, they’re doing that for the simple fact that they understand the volatility of the coin. So they’re, they’re probably they’re basing what they’re out with their, their formulas. They’re probably basing a, like a a hundred percent, well, not like an 80% draw down. And so they’re, they’re probably backed up to 80% there. They’re probably not banking at this upper go to zero. So, but they’re probably holding almost like enough for what says there, they’re holding double. But if, I don’t know, if they’re holding completely double, uh, you’d have to look per each coin and see exactly how much they have. But that’s why people are all about DIA is because if they do hold double the amount of coins, then your money is pretty safe, transparent, and fully decentralized.

Quick to turn into other assets, no external custodians, uh, all assets, all sets, excuse me, all assets are controlled by Ethereum accounts. So again, everything’s in this ether, um, world, I kind of want to see what is Bitcoin. Cause if, cause everything seems like Ethereum is, is the way to go. So just because it has more, uh, it just has more user-ability, uh, they’re less stable than Fiat backed stable coins. You need to keep an eye on the value of the crypto collateral. Yes, that’s very true. But it’s also, like I said, there, you do need to pay attention to that. And that is true. Precious metals, like back coins. Instead, these stable coins, you use resources like gold to maintain their value.

See. I, I disagree with that. So if it was precious metals, it’s almost like it’s crypto backed because precious metals, CSS is the prose safe against crypto volatility. Right. But they’re not safe. Hold on a second. We’re in this, but let me just show you what I’m talking about.

And so if you had your, if everything’s metal based and it’s backed by gold, look at the, the gold chart over the last year, right. That’s lost for almost $400, right. Per ounce of gold. So, and that is enormous. Look that Goldman Sachs is close to offering Bitcoin and other digital assets to wealth management clients. Let’s get back to our, so with the precious metals, I would disagree that it’s like a Fiat coin. Um, a Fiat coin is just a promissory note. But if it’s backed by a precious metal, then it’s more like a crypto backed. Right. Which can be good. But as you can, it can also be just as horrible. Because again, look at the price. Now let’s do a five-year.

Yeah. If you had bought back in 19, that’s $1,200 an ounce. That’s great, but let’s do all time. You see how in? Oh, in 2012, you were right around 2000, then, then it dropped all the way down 50%. So if you’re going to tell me that pressure backed by a precious metal is stable in that’s that’s excuse my French, but that’s. That’s just like, it’s just, it’s the same as crypto backed, right? Because the price of gold fluctuates as well, um, algorithm out basically using the algorithm, these stable coins, aren’t backed by any other asset. Instead, an algorithm will sell tokens. If the price falls below the desired value and supply tokens, if this is the best one, this is the best. This is your, this is, this is the central bank. All right, then I’m not going to say whether our central bank is good at this or bad at this.

That’s not my opinion. However, this is based basically how the, the central bank is, right? So they control the money supply. This, this by the computers are controlling the money supply, right? That’s what it’s saying. There sell tokens to the price. Billows falls below desired value and supply tokens at the value goes beyond the desired amount, because a number of these tokens and circulations changes regularly, the number of tokens you, you own will change for officer reflect your share, all right, pros, no collateral needed controlled by a public algorithm. Cons you must, you need to trust or be able to read the algorithm.

Valid point. I agree with that. Your balance of coins will change based on your total on total supply. So people don’t pay attention to this, but it’s, this is literally the American money system, right? We have to trust that the central bank knows what they’re doing, right? Or you got to understand how they’re doing it. Your balance of coins will change based on total supply. Well, if you have a dollar bill, you don’t understand, like you might not see it change, but the value of that dollar changes on a daily basis. If you don’t believe me, look at the price of milk or look at the price of oil or look the price of cheese, or look at the prices. Each price, the price has changed every single day. Well, that’s also has to do with the money supply, how much money is in there and how much money is not.

And you’re going to be like, well, gasoline has to do with the breadth of oil. Yeah, it does. But then also how much money did we print? Right? So if we printed a billion more dollars yesterday, then you’re going to have to spend more money to get the same amount of gas as yesterday or as the day before. Right? All right. What is a staple coin? And the four different ways we went through them. Hope that was a nice lesson for you. If I were to choose, let’s go back to the different coins now that I know what they are. Um, man, I don’t lost it.

There we go.

So we have Fiat, Fiat, Fiat, crypto, crypto, Alka, remake that ample fourth.


Financial building cryptocurrency, we will be looking at this later on. Let’s see if Coinbase, you can sell it an ample fourth.

There’s this search anywhere.

Look at that. And I pull forth and it’s not supported by Coinbase. So you wouldn’t be able to buy this on Coinbase, but it looks like you can come here. And


So there’s a lot of exchanges out there. I got to, we’re going to have to make a video on, on the exchanges as well. But right now the exchange where we’re based, we’re working, where you have that they exchange that we’re focused on is the Coinbase exchange. Once you go through all these coins that they have right here, then we will go and start looking at these other exchanges. I don’t want to confuse everybody too much. It’s a lot of work, uh, to be able to go through all this. So let’s first focus on one. So that’s stable coins. Okay.