In today's craze for digital currencies, stablecoins and Bitcoin have become the focus of discussion. Although both stablecoins and Bitcoin are digital currencies, there are many differences between them. This article will delve into the differences between stablecoins and Bitcoin, revealing their unique status and functions in the world of digital currencies.

Stablecoins and Bitcoin are two giants in the field of digital currencies. Stablecoins are known for their price stability, while Bitcoin has attracted much attention for its large price fluctuations. The stability of stablecoins comes from the asset reserves behind them, while Bitcoin has become digital gold by virtue of its decentralization and limited supply. The difference between the two lies not only in price fluctuations, but also in their issuance mechanism, usage scenarios, and future prospects.

First, let's take a look at the issuance mechanism of stablecoins and Bitcoin. Stablecoins are usually issued by central institutions, and their value is linked to a certain stable asset (such as the US dollar, gold, etc.) to maintain price stability. This issuance mechanism makes stablecoins highly acceptable and convenient in scenarios such as payment and cross-border transfers. In contrast, the issuance of Bitcoin is achieved through "mining", and its quantity is capped and gradually decreases over time, which is one of the important reasons why Bitcoin is known as "digital gold".

Secondly, stablecoins and Bitcoin also differ in their usage scenarios. Stablecoins are mainly used in daily scenarios such as payment and trade settlement, and their price stability makes them the "legal currency" in the world of digital currency. Bitcoin is more regarded as a value storage tool, similar to traditional gold, and is used by investors for risk aversion and asset allocation. The uniqueness of Bitcoin lies in its decentralized and tamper-proof characteristics, which also gives it unique application scenarios in some specific fields.

In addition, the future prospects of stablecoins and Bitcoin are also attracting attention. With the continuous development of blockchain technology, the application of stablecoins in the financial field will become more and more extensive, which may have a profound impact on the traditional financial system. As a pioneer in the field of digital currency, Bitcoin's status is unshakable, and its future development direction is also attracting much attention. With the acceleration of the global digitalization process, both stablecoins and Bitcoin are expected to play a more important role in the digital economy.

In summary, although stablecoins and Bitcoin both belong to the category of digital currency, there are obvious differences in issuance mechanism, usage scenarios and future prospects. Stablecoins are suitable for daily payment scenarios with their price stability; while Bitcoin focuses on value storage and investment, and has unique decentralized characteristics. In the future, with the rapid development of the digital economy, both stablecoins and Bitcoin are expected to play a more important role in the field of digital currency and bring new changes to the global financial system. Let us wait and see and witness the future development of digital currency.

The four most famous international exchanges:

Binance INTL	OKX INTL	Gate.io INTL	Huobi INTL
China Line　APP DL	China Line　APP DL	China Line　APP DL	China Line　APP DL

Note: The above exchange logo is the official website registration link, and the text is the APP download link.

The first digital currency used in the blockchain field is Bitcoin. Bitcoin has been the leader in digital currencies since its birth. Even so, Bitcoin still fluctuates greatly. As a currency, its volatility is so great that it is difficult to exchange goods. In order to solve this problem, stablecoins were born. Stablecoins will anchor stable assets such as the US dollar and gold, so that their own value will also be very stable. Because of this, stablecoins are mainly used for commercial applications, not as investment products, and also do not have investment value. Now let the editor of the currency circle introduce to you in detail what is the difference between stablecoins and Bitcoin?

 What is the difference between stablecoins and Bitcoin?

Simply put, stablecoins are a type of cryptocurrency with stable value. The background of its birth is that the price of cryptocurrency fluctuates greatly. As a medium of exchange, it connects the digital currency world with the legal currency world. The development of stablecoins has only been a few years. Stablecoins originated from the USDT issued by Tether Limited, which was established by Bitfinex in 2014. The ultimate goal of a stablecoin is to become a digital form of cashless cash.

Stablecoin is a virtual currency that links cryptocurrency to the legal currency USD. It is a virtual currency that is stored in a foreign exchange reserve account and supported by legal currency. Stablecoin is different from Bitcoin. Its characteristic is relatively stable. The old exchange ZB supports USDT/QC spot trading and 10x leverage trading. To put it bluntly, it is playing with the difference between RMB and foreign exchange. But it is stable and will not cause liquidation. It is an investment project worth trying.

 What types of stablecoins are there?

Stablecoins can be divided into three main types, namely stablecoins collateralized by legal currency, stablecoins collateralized by cryptocurrency, and stablecoins without low collateral.

1. Stablecoins collateralized by legal currency. The most typical case is USDT issued by Tether, whose Chinese name is Tether. Each Tether issued and circulated is pegged to the US dollar at a one-to-one ratio, and the corresponding total amount of US dollars is stored in Hong Kong Tether Co., Ltd. When the US dollar is used as the unit of measurement, there is no risk of fluctuation in the value of the collateral. The limitations of this stablecoin are centralization, opacity, and no guarantee and collateral cost for storing funds or redeeming tokens. For example, the market has never stopped questioning the transparency and lack of regulation of USDT: Is the dollar reserve sufficient? Is the issuance of air currency causing bubbles, etc. In the face of doubts, Tether has always claimed that it has sufficient reserves, but has not yet disclosed its own reserve account audit data.

2. Stablecoins collateralized by cryptocurrencies. In this model, the collateral that supports the stable currency is itself a decentralized crypto asset. This method allows users to create stable currencies by locking up collateral that exceeds the total amount of stable currencies. The collateral of a stable currency is usually an unstable crypto asset, such as ETH. If the value of this asset drops too quickly, the stable currency will not have collateral of sufficient value. Therefore, most projects using this model require that the stable currency have excess collateral to prevent drastic price fluctuations. Its limitation is that the collateral fluctuates, and it has almost no resistance to black swan events, and requires excess collateral.

3. Stablecoins without low collateral: seigniorage shares/decentralized banks/algorithmic stabilization mechanisms. As a (partially) decentralized bank and adopt an elastic supply mechanism. Usually involves some margin positions, algorithmic rules and complex stabilization mechanisms. It is to stabilize the supply of money by algorithmically expanding and contracting prices, just like central banks do with fiat currencies. In this model, some stablecoin tokens are directly linked to assets such as the US dollar after the initial distribution. As the total demand for stablecoins increases or decreases, the supply of coins will change automatically. Its limitations are that stability is usually maintained by centralized mechanisms, monetary policy is still complex, unclear, unproven, and incentives may be insufficient.

In summary, this is the answer to the question of what is the difference between stablecoins and Bitcoin by the editor of the currency circle. I hope it can help all investors. Stablecoins have always been known as the holy grail in the field of digital currency. It has greatly reduced the threshold for ordinary people to enter the world of cryptocurrency. Stablecoins are obviously different from Bitcoin, but each has its own advantages. Stablecoins have more stable returns. Although Bitcoin has risen and fallen sharply, if you are optimistic about Bitcoin, it is also a good choice and can be held for a long time. You can choose according to your preferences. In general, stablecoins and Bitcoin are both good projects that can be invested.