If you’re new to the crypto world and hearing a lot of comparisons between stablecoins and decentralized tokens but can’t really define everything, this article is for you. We’re exploring both notions to give you an idea of what’s what. Furthermore, we’re comparing the centralized stablecoins to decentralized crypto tokens so you can decide which one to go for in the context of online gaming. So if you’re a crypto fan or just at the beginning of your journey in this area, keep reading to better understand the best approach for a great experience. Should you go with the relatively improved stability of stablecoins, or is it better to accept a little risk with tokens?
Key Differences Between Decentralized Crypto Tokens and Stablecoins
Before pointing out the differences between the two, it’s best to start by defining each category of digital assets to have a better understanding. Crypto tokens, like Bitcoin or Ethereum, fluctuate in value depending on the supply and demand of the open market. Their price is not determined or backed by a physical asset which means you can see high fluctuations in a limited time.
On the other hand, just like the name suggests, stablecoins were designed to maintain a relatively stable value. These coins are backed by another currency or assets, like gold or the US dollar to obtain this status. Therefore, the supply and demand mechanism does not have an influence on their value, since they’re tied to fixed assets.
After defining both digital assets, you can already hint at the main difference. However, there’s more setting these apart and we’re taking a closer look at everything.
Volatility
As previously mentioned, decentralized tokens can experience high levels of volatility since they’re only influenced by the market demand and are more open to fluctuations. On the other hand, STablecoins are designed to address this issue of cryptocurrency in particular, giving you a stable value
Backing
While cryptocurrencies are not backed by a physical asset or fiat currency, stablecoins are often tied to the US dollar or other currency. In some cases, stablecoins are directly tied to gold to further limit the fluctuation
Use In Online Gambling
While both assets are used by casino and sports betting enthusiasts, the preferences are split. While some prefer to go for crypto, hoping to add a bit to their win due to a price increase, others prefer the stability of centralized tokens. Furthermore, cryptocurrencies double as a means to store value or speculative trading, while stablecoins are solely used as a payment method.
Governance
One cannot claim that decentralized crypto is ungoverned. Even though it is not centralized, the system is nonetheless managed by the user communities that trade the respective coins. Stablecoins, on the other hand, are backed by banks or other financial institutions, making them similar to traditional cash.
Examples of Cryptocurrency and Stablecoins
If you’re unsure which one is which, we’re giving you examples of decentralized crypto and stablecoins so you can always tell the difference.
Popular Crypto Tokens
Bitcoin: The cryptocurrency that started it all. Established in 2009 by Satoshi Nakamoto (still not clear if a person or a group of programmers), BTC has taken the world by storm and reached an all-time high of $68,789. It’s also the crypto with the highest price fluctuations so far and holds a market cap of over $458 billion
Ethereum: ETH is taking the second spot among decentralized tokens with a market cap of $193 billion. It’s also based on the blockchain platform and went live in 2015 when Vitalik Buterin launched his project
Main Stablecoins
Tether
Also referred to as USDT, this coin received its name simply because it tethers to the US dollar value. It’s one of the most popular stablecoins and also uses gold as a backup asset. It matches the value of the US dollar and provides a non-fluctuating currency for online gambling and other activities
DAI
Another popular stablecoin is the DAI which is created on the Ethereum blockchain. This gives it novelty as it’s the most famous stablecoin backed by a cryptocurrency. It was created by Maker Dao and has one of the highest market caps.
Which is Better for Online Gambling?
Following a discussion of the definitions and fundamental differences between stablecoins and decentralized crypto tokens, it is critical to analyze their application in the online gaming business. For those who want to gamble with both assets, the Middle Eastern markets are experiencing a surge in cryptocurrency gambling, making it worthwhile to investigate the best casinos in the Middle East. Finally, the choice between stablecoins and decentralized cryptocurrencies is determined by the risk tolerance and preferences of the player. While stablecoins provide stability, they lack the flexibility and anonymity that cryptocurrencies provide, which may be a decisive factor for certain players. Yet, given the possibility of a sudden price drop, some players continue to prefer stablecoins.
Final Thoughts
Individual choices and risk tolerance ultimately determine whether to use stablecoins or decentralized cryptocurrencies. Because of their ties to tangible assets or fiat currency, stablecoins provide relative stability, making them a safer option for individuals who prefer less volatility. Decentralized crypto tokens, on the other hand, are susceptible to market volatility and might be viewed as a riskier alternative, but they also have the potential for bigger profits. Stablecoins and decentralized crypto tokens are both popular options for online gambling, and the choice is dependent on the player’s risk tolerance and preferences. Overall, recognizing the key distinctions between stablecoins and decentralized crypto tokens is critical for making informed decisions in the rapidly changing world of cryptocurrencies.
