Stablecoins For Starters
For your family and friends, whether they are crypto curious or just trying to find their next high yield savings account
After many holiday questions about what is happening in crypto, I decided to write this mini intro to educate and onboard my family and friends into one of the biggest and most practical real world applications in crypto today, Stablecoins.
Online Dollars
Today when you give a bank your dollars, they don’t just store it in a safe. They create a digital record of it in a private database, then display a user-friendly online version of it for you to interact with.
With these online dollars, the bank lets you spend or send your money using 3rd party apps like Venmo. While relatively easy to use, the bank ultimately still has control over your online dollars. This means a bank can:
Block access to your accounts
Charge high fees to send/use your own money
Profit off your money through lending it out
While this seems like a small price to pay for this new user-friendly financial system, an emerging crypto standard replicates the experience while also allowing users to retain control over their digital dollars.
Onchain Dollars
In this new standard, the banks still hold dollars, but instead of recording them in a private database, they issue digital records of these dollars on a public blockchain. These digital dollars are known as Stablecoins.
Similar to the online dollars you see today, they have a 1:1 value with a dollar, but note that in the short term the price can sometimes vary due to buying/selling pressure. What's unique is with Stablecoins you have control over your money. This means that they can:
Have direct access to send, spend, or do anything with it without a bank
Send dollars for less than a cent (and sometimes free!)
Lend your money to others to earn interest
Stablecoins have emerged as a valuable tool for remittance, payments, and as a store of value worldwide. Over the past 12 months, they have facilitated an impressive $27.5 trillion in transactions and have been integrated into the strategies of major payment businesses like Stripe, Paypal, and Visa.
Now what?
Not only do stablecoins offer the benefits above, but they currently grow your savings faster than normal bank accounts. Today regular high-yield savings accounts offer around 4% interest but a Stablecoin like USDC can earn you up to 4.7%. And for those willing to take on a little bit of risk, there are opportunities in the crypto economy to make up to 10-20% on your Stablecoins! (to be covered in another article!).
Want to try out this new technology? Here is the quickest way to getting stablecoins today:
Download the Coinbase Wallet App
Create a wallet
Buy USDC on Base using one of the offered methods
Go to USDC you own and click Activate to earn the 4.7% yield paid out monthly