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Cryptocurrency is a hot topic among various communities around the world including lawmakers, investors, and crypto traders. Gambling with blockchain-based currencies is also increasing in popularity although it is far from taking the lead against traditional fiat-currency wagers. Of the most debated coins in the crypto collection, are stablecoins and world financial leaders can’t seem to agree on how to deal with them. The primary motivation behind the creation of stablecoins is to provide a less volatile cryptocurrency for exchange. How are these coins faring at providing stable currency and is it a good choice for bets, compared to fiat-based gambling? Let’s explore what stablecoin gambling offers and compare how it stacks up against fiat wagers. Fiat Currency vs Stablecoins We all know what fiat currency is because that is how we transact and purchase goods daily. Fiat has been around for ages, but how does it work and where does it get its worth from? On the flip side, we ask the same questions about stablecoins and attempt to answer these too. The Emergence of Fiat Currency The first government-issued money originated from China in the 10th century, but fiat money as we know it today gradually developed over some time and it wasn’t until the 1970s that it became a global norm. US president, Richard Nixon, decoupled the dollar from gold in 1971 and launched government-backed currency to replace commodity-backed currency. The word ‘fiat’ originates from Latin and means ‘it shall be’ or ‘let it be done’ and all modern fiat money depends on the word of the government that backs it. Fiat currency has no more worth than the paper they print it on, but if the originating country considers it legal tender, fiat is worth whatever the central bank says it is. Money or commodities were a means of storing wealth and transacting for trade or debt and when the gold standard disappeared in the late 20th century, fiat money became the most widely accepted legal tender for transacting. Apart from the availability and acceptance of fiat, governments also gained the advantage of meeting the demands of their citizens by printing more money. Features to Keep in Mind Because a country’s central bank governs fiat money, there is a sense of stability in times of economic turbulence. Storage and management and accessibility of fiat money are fairly straightforward. Thanks to its capacity to store buying power, people easily decide on growth and investment with fiat currency. It is a globally accepted means of trade, and we can buy just about anything with fiat money. Cryptocurrency: A Decentralised Opponent Bitcoin arrived as the first cryptocurrency and decentralised money option with much push-back from the traditional finance sector. Shortly after, more blockchain-based coins arrived on the scene and soon there was a trading market for the sector. Unfortunately, because of the volatile nature of cryptocurrencies, there are few willing to accept them. The reason some adopt digital currencies is that there is no single entity that controls them like traditional financial systems. Decentralised finance (Defi) is attractive to people who want to cut out the middleman, and the costs involved with financial institutions handling their money. Another advantage of cryptocurrency is the blockchain features that make transactions highly secure and swift. Stablecoins Blockchain experts recognised the gap in the market and introduced stablecoins in response to the unfavourable volatile coins rejected by many. The original cryptocurrencies like Bitcoin and Ethereum share a common trait with fiat, nothing backs the value of the currencies. Instead, these coins and their value depends on the basic principle of economics - supply and demand. Stablecoins, on the other hand, resemble money from earlier eras because it has collateral backing. The value of stablecoins depends on what they pegged the specific coin to. External references like commodities or algorithms that determine supply levels, allow these coins to be much less volatile than standard cryptocurrency. They can peg these digital assets to fiat currency, foreign exchange-traded commodities, and precious or industrial metals also referred to as traditional financial investment tools. Sometimes, the stablecoin might have other cryptocurrency backing or non-collateral backing. Features to Keep in Mind Stablecoins are available 24 hours a day via the internet, almost anywhere in the world. Transactions are super-efficient, and the lack of a middleman drops costs substantially. Stablecoins are native online currencies and very adaptable. Transactions only require crypto wallets in the peer-to-peer network. Different Stablecoins In order to stabilise the value of these crypto coins, they maintain a reserve of a commodity as collateral. Four types of stablecoins exist with different collateral to stabilise their value. Fiat-Backed Stablecoins Fiat-collateralised stablecoins are pegged to one, or more, fiat currencies, with the US dollar being the most popular fiat collateral. This category of stablecoins maintains a steady value according to its pegged currency and this should make it much less volatile than the original cryptocurrency. The most popular fiat-backed stablecoin is Tether, and it has the largest market capitalisation, making it the most liquid. Although the coin experienced a big drop in the value of approximately 1% in May this year, it remains the best stablecoin. A major advantage of Tether is that almost all crypto exchanges around the world use it. Other popular choices in the fiat-backed category include two more dollar-pegged coins - USD coin and Binance USD, as well as the Euro-pegged coin – EUROS – which is the largest Euro-backed coin. Regardless of the relationship these coins have with different fiat currencies, some countries prohibit the use of cryptocurrencies and regulators continue to push for Defi regulations. Crypto-collateralised Stablecoins It may sound counterintuitive, but some stablecoins have cryptocurrencies as collateral. When they peg its value to a crypto reserve, the stablecoin is over-collateralised. This means that the value of the pegged cryptocurrency must always exceed the value of the stablecoins issued. An example of this is a coin valued at 1 million will have a cryptocurrency worth 2 million backing it. The insurance against a 50% drop in the value of the pegged cryptocurrency allows for lower volatility while keeping the coin purely blockchain-based. MakerDAO’s DAI is a crypto-backed stablecoin and although it is pegged to the US dollar, Ethereum and other cryptocurrencies worth 150% of the DAI stablecoin in circulation back it. Commodity-backed Stablecoins The third type of stablecoin has its value pegged to physical commodities like precious metals and oil. Collateralised by the values of gold, silver, oil, and sometimes real estate, these stablecoins hold the values of the real-world assets backing them. Preferred by investors with an interest in these commodities, gold and oil-backed coins allows people to easily invest in highly sought-after commodities, without worrying about how they will sell the materials when needed. Examples of these coins are Paxos Gold and Tether Gold. Algorithmic-backed Stablecoins These stablecoins may or may not hold physical reserve assets as collateral. Instead, they differ from normal cryptocurrencies because algorithms control their stability by limiting supply. Essentially, the algorithms and computers that run the formulas play the same role as a reserve bank do with fiat currency. The only challenge with this type of stablecoins is the lack of physical collateral, as felt by the investors of TerraUSD (UST) on 11 May, when its pegged token Luna slumped more than 80% overnight and dragged UST values down by 60%. Online Gambling: Stablecoin or Fiat Wagers? With the convenience, speed, and low cost involved with blockchain currencies, the emergence of crypto casinos was inevitable. Now that stablecoins present a less volatile choice to gamblers, the natural question is whether a crypto casino is better than one that only accepts fiat currencies. Let’s do a quick comparison of stablecoins and fiat to help us conclude: Stablecoins This category of cryptocurrency presents us with a more reliable source of tradable currency making it a highly liquid option. The pegged feature allows for quick conversion from crypto to fiat. Stablecoins present two advantages: the decentralised feature of blockchain technology, plus greater stability from solid collateral. Although stablecoins are better equipped to be a reliable means of trade, few accept it. However, many online casinos that accept cryptocurrency have stablecoin options. Fiat Currency Fiat money is available anywhere and when gambling online, players only need the right type of currency for their region to enjoy a wide variety of casino options. It is a highly reliable currency. The value is determined by central issuers, and this causes stability. They accept fiat currency anywhere and can pay for or purchase almost anything. What’s the Verdict? Depending on the player, both fiat and crypto gambling with stablecoins present advantages. The lower volatility of stablecoins makes it a far more attractive choice in the crypto space and this drives its popularity, specifically fiat-pegged coins. A punter’s preferences determine the verdict here because both options have significant advantages. For the best online casinos, visit our casino guide or check out our bitcoin casino list for the top crypto gambling options.
The biggest name in the cryptocurrency game is Bitcoin, so much so that in many cases the word “bitcoin” has become synonymous for the entire industry. However, the cryptocurrency ecosystem is an incredibly interesting industry which has been built on an innovative codebase known as the Blockchain. We won’t get into the weeds with this code base other than to note that it is what makes cryptocurrencies virtually impervious to hacking, promises zero server downtime and ensures you can remain anonymous while exercising full control over your funds. Four Noteworthy Cryptocurrencies With more than 1000 cryptocurrencies on the market we have simplified matters by focusing on 5 intriguing non-Bitcoin cryptocurrencies. Join us as we delve into what makes them both unique and potentially the next big breakout coin. ✓Ethereum (ETH) – Smart Contracts Ethereum is a well-known name in cryptocurrency circles, mostly for being the Pepsi to Bitcoin’s Coca Cola. What is less commonly known about Ethereum is where it secures its value proposition? Unlike Bitcoin which sees its value-driven by public awareness and scarcity, Ethereum generates its value from how useful it is to its users. Ethereum allows its users to perform credible transactions with buyers and sellers via smart contracts. These smart contracts use secure code to ensure the transactions in question are secure and will be honoured by both parties. Ethereum stands to see rapid growth once corporations become familiar with the benefits and features of doing business on the blockchain. The cryptocurrency has positioned itself as the one to work with once smart contract adoption hits the mainstream. ✓Litecoin (LTC) – Fastest Transactions There is very little to differentiate Litecoin from Bitcoin when looking at its basic setup. This is not unexpected given that Litecoin is considered a ‘hard fork’ of BTC, having been built using the same basic premise. Where Litecoin does shine however is in the cryptocurrency evangelism and technology adoption. Created by ex-Google engineer and creator of Coinbase, Charlie Lee, the cryptocurrency showcases the latest in blockchain development using its own algorithm for mining and requiring different hardware to other mining solutions. It is this constant dedication to speed, data security and enhancement that allows Litecoin to be the fastest processing coin on the market, showing up to 75% faster transaction speeds than Bitcoin. Charlie Lee is also an outspoken supporter of cryptocurrency adoption and works to educate the public and corporations of its benefits through the non-profit Litecoin Foundation. ✓Ripple (XRP) – Banking Pioneers Where most cryptocurrencies see themselves as leather jacket-wearing rebels, Ripple has taken a more mature approach to growing its user base. The bulk of its growth was achieved by partnering with more than 300 existing financial institutions. Their financial infrastructure is called Ripplenet, and by partnering with the likes of American Express, Bank of America, HSBC, Siam Bank, Nium, Moneygram and many others they have access to a limitless user base that literally crisscrosses the entire planet. These users are also the recipients of the faster transactions and lower costs offered by a virtual coin network. Another unique feature of Ripple is that while the cryptocurrency does use a ledger system like Bitcoin and its peers the coinage does not require traditional mining to be performed to acquire it making it cryptocurrency that does not come with massive power bills associated with crypto-mining. ✓Dash (DASH) – Traceless Transactions Dash lives up its name by being a virtual currency which offers lighting fast transaction speeds of 1 second, across more than 4300 global merchants. For those looking to interact with Dash as an investment item, it can be traded on more than 260 exchanges around the world. While all blockchain-based cryptocurrencies offer users the safety net of anonymity, Dash has taken that promise one step further. Rather than keep a transaction history – which would allow a third party to track your digital movements - Dash does not publish your transaction data to the blockchain. This added layer of security is proving popular with users, which sees them process more than 20,000 transactions daily. This transaction limit could see a sharp increase in the near future as Dash readies to launch the new DashPay Wallet for both Apple iOS and Android. Honourable Mentions During our journey through the weird and wonderful world of altcoins, there were several that caught our attention but did not seem poised to become big names in the industry. That is not to say that they do not serve a niche audience, check out our runners up to see if any of these meet your needs. USD Coin – While not a decentralised cryptocurrency in the true sense this is a virtual coin based on the value of the US Dollar. It could very well the way to transact on a daily basis should the fiat banking world do away with paper money. Dentacoin – One of the many niche coins which use Ethereum as its base, Dentacoin is the first virtual currency targeting the dental profession. With the coin, users can pay for care, earn rewards and even trade the coin on a participating exchange. Sexcoin – Where there is money there is sex, as the internet has proven over and over again. Established in 2013 Sexcoin aims to become to the go-to virtual coin for all your adult needs, everything from hiring a dancer to tipping your favourite camgirl. Let us know if you have any interesting altcoins that you feel have the potential to blow up in the future.