In the world of crypto, where new cryptocurrencies emerge and fade like the seasons, it’s essential to understand the different categories of this crypto landscape and how we can make more informed decisions in the ever-expanding and prevalent crypto space.
Moneybrain, consider themselves more than just another crypto wallet but as your trusted crypto companion. Moneybrainn offer not only a world-class crypto wallet but also an education in the crypto world, taking you from a crypto novice to a crypto aficionado, armed with the knowledge to make the best decisions for your crypto portfolio.
This article specifically focuses on understanding classic cryptocurrencies and stablecoins: What are they? How do the two differ, and what are the advantages of holding cryptocurrencies for transitionary purposes versus holding them for appreciating value?
Moneybrain Jargon Buster
We try to keep our articles jargon-free, but sometimes it’s difficult to escape technical terms without becoming too wordy! So, we’ve put together a Jargon Buster for terms we use in this article that might need a second glance:
Network – A system that supports the exchange of cryptocurrencies on a blockchain.
Blockchain – A decentralised ledger that is public and records all transactions.
Mint – The process of creating a tokenised coin on a network and minting a limited number of coins.
Pegged – The process of setting an asset value based on the value of another valuable asset.
Fiat – The classification for currencies that are government-backed and traditionally issued in paper denominations.
Decentralised Apps – Applications built on decentralised networks (blockchain).
Crypto Pie – Similar to an economic pie, the crypto pie refers to the size of the overall cryptocurrency market.
What are Classified as Cryptocurrencies?
Bitcoin
Bitcoin, the network originator, laid the foundation for the cryptocurrency revolution by leveraging robust blockchain technology. Created by an initially anonymous individual (or group) under the pseudonym Satoshi Nakamoto, Bitcoin was designed to ignite a financial revolution by introducing a decentralised monetary system. This bold move not only proved the viability of decentralisation but also opened the floodgates to the crypto. Following Bitcoin’s success and rise, new cryptocurrencies began to fork the technology, often modifying it for greater transaction efficiency but sometimes simply to claim their own slice of the ever-growing crypto pie.
Ether
Ethereum, following in Bitcoin’s pioneering footsteps, emerged as a transformative force. More than just a cryptocurrency, Ethereum introduced Ether and a groundbreaking open network that allowed others to create their own cryptocurrencies and decentralised applications. It popularised smart contracts as a secure and reliable way to mint new coins, crypto applications, and tokens onto the Ethereum blockchain. This innovation solidified Ethereum’s reputation as a cornerstone of the blockchain ecosystem, with many leading cryptocurrencies and decentralised apps choosing to build and mint on it. Fun fact: Moneybrain’s own stablecoin runs on the Ethereum network, but more on that later!
What are Stablecoins?
A stablecoin is a cryptocurrency pegged to a fiat currency to provide increased stability. Stablecoins are backed by reserves equivalent to the value of the coin, making them far less volatile than traditional cryptocurrencies. Stablecoins offer a more predictable value, making them appealing to users seeking stability. The blockchain technology behind stablecoins allows for faster, cost-effective, and borderless transactions. It also enables greater personal control over finances, as users benefit from more transparent and decentralised systems that empower consumers. Below are a few examples of recent stablecoins:
| Stablecoin | Network | Backing |
| Ripple’s RLUSD | XRP Ledger | Ripple’s RLUSD comes with multichain insurance using both Ripple’s native XRP ledger and Ethereum’s ledger and is fully backed 1:1 by segregated reserve cash equivalents. |
| Paypal’s PYUSD | Ethereum / Solana | Paypal has launched its own stablecoin backed by dollar deposits, US treasuries, and cash equivalents and boasting no fees to buy, sell, hold or transfer PYUSD to eligible US PayPal balance accounts. |
| Moneybrain Stablecoins | Ethereum | Moneybrain GBPB, USDC, EUROB, and AUDB are stablecoins the Moneybrain team exchange for Moneybrain’s native currency BIPS. Cash equivalent is held at a bank or regulated custodian to provide 1:1 backing for the crypto asset. |
In conclusion
Stablecoins can be transformative for retail and corproate businesses, offering greater speed of transactions, greater efficiency, and cost-effectiveness that more traditional fiat transactions will find difficult to match.