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Stable Coins Explained

What is Stable Coin?
A stable coin is a type of cryptocurrency whose value usually relies on a different range of assets, such as government currencies such as the dollar or precious metals such as gold.

Exporters adopt various methods to maintain the price of stable coins. Some stable currencies, such as the USDT, USDC, BUSD, and GUSD, have one-to-one support with the US dollar. Other stable coins, such as tether gold, also support physical commodities such as an ounce of gold.

There are also decentralized stable coins such as DAI and FEI that are based on different algorithms.

Before the advent of stable coins, most people traded cryptocurrencies in government currencies, or fiat currencies or other cryptocurrencies. Pankaj Balani, CEO of Delta Exchange cryptocurrency exchange, said that since 2017, cash transactions with stable coins began and accounted for a large share of transactions.

Cryptocurrency trading using stable coins is a faster and cheaper option compared to Fiat currencies and allows for more liquidity. Stable coins, unlike other cryptocurrencies, are theoretically less prone to market fluctuations.

Stable coins are also used to lend cryptocurrencies. You can receive 4% annual interest from depositing  USDC in CoinBase savings accounts. The USDT deposit interest rate can also be from 1.66 to 13.5 percent.

 

What is a block chain ?

We are hearing alot about Bitcoin, Crypto Currencies and blockchain these days but many of us may not know what exactly a blockchain is and how it works.

I’m Kamran and in this video we will see what is a blockchain by definition and what components it is made of.

What is a Block chain?

A block chain simply is a set of connected datasets available to all members of a chain.

To be more clear lets consider an accounting ledger where we write down the business transactions. assume we have a copy of such notebook available to all stake holders of our business. This way we have a block chain where every page of the book can be seen as block and the whole shared copies of book is our block chain.

What do we mean by a block ?

A block is a special data structure that consists of two main parts, first the header and second the body or data. The header contains information about the block and also a Hash value for the data in it in addition to the Hash value of the previous block.

This way the blocks are connected together by hash values and the chain is formed. We talked about hash values so lets see what do we mean by Hash ?

Hash is a mathematical function that gets a variant length input and generates a unique constant length output string.

For example we get the Hash value 52ED879E for our input string “The red fox runs across the ice”. Now lets change the input into “The red fox walks across the ice”. now we will get the Hash value 46042841. see, even a simple change in the input will generate a completely different hash value.

This is the functionality used in block chain to make sure that saved data in the blocks can not be altered later. As you can see the Hash value which is unique for every data block can be like a finger print for that block. since each block knows the previous blocks finger print no one can replace a stored block in the chain.

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