In recent years, stablecoins have gained significant popularity in the world of cryptocurrencies. Designed to provide stability and reduce volatility, stablecoins are pegged to a specific asset or currency, often the US dollar, offering a reliable means of exchange and a hedge against market fluctuations.
Today 2 of the top 5 cryptocurrencies by market capitalization are stablecoins – USDT and USDC. According to Coingecko, major stablecoins account for over 129 billion dollars today or 10% of crypto’s total market cap. That number is staggering given that at the start of 2018, USDT (the sole stablecoin at the time) accounted for just over 1 billion dollars in market cap.
If you’re considering adding stablecoins to your cryptocurrency portfolio, you may be wondering about the various methods available for purchasing them. In this blog, we will explore five different ways to buy stablecoins and help you make an informed decision.
1) Centralised Cryptocurrency Exchanges
The most common method of purchasing stablecoins is through cryptocurrency exchanges. These platforms allow you to trade your fiat currency or other cryptocurrencies for stablecoins. Established exchanges such as Binance, Coinbase, and Kraken provide a wide range of stablecoins to choose from, including Tether (USDT), USD Coin (USDC), and Dai (DAI). To get started, you typically need to create an account, complete the necessary verification process, and deposit funds into your account. Once your account is set up, you can place an order to buy stablecoins and store them in your exchange wallet.
2) P2P (Peer-to-Peer) Platforms
Peer-to-peer platforms have gained popularity as an alternative way to buy stablecoins directly from other individuals, eliminating the need for intermediaries. Outside western countries, P2P platforms are the dominant way to buy cryptocurrencies as many centralised platforms don’t have banking partnerships. P2P platforms like OpenPeer and Paxful connect buyers and sellers, allowing them to negotiate and complete transactions securely. These platforms provide a wide range of payment options, including bank transfers, PayPal, and even cash. While using P2P platforms can offer more flexibility, it’s crucial to conduct thorough research and trade with reputable traders.
3) Stablecoin Issuers
Another way to buy stablecoins is by going directly to the issuer. Some stablecoin projects offer their own platforms or websites where you can purchase stablecoins directly from them. For example, you can buy USDC from the official Circle website. Buying stablecoins from the issuer may provide added transparency and assurance of the coin’s backing, as you are dealing directly with the organization responsible for maintaining the stability of the coin. Stablecoins purchases directly from the issuer are only typically available to accredited investors or companies.
4) Over-the-Counter (OTC) Trading
For large-volume purchases, institutional investors, or high-net-worth individuals, over-the-counter (OTC) trading is a popular method. OTC desks facilitate direct trades between buyers and sellers, usually with personalized service and competitive pricing. OTC trading can be accessed through specialized cryptocurrency brokerage firms or even directly with some exchanges that offer OTC services. This method is suitable for those looking to buy stablecoins in significant amounts and seeking a more personalized and private trading experience.
5) Decentralised Exchanges
If you already have funds in cryptocurrencies like Ethereum, a decentralised exchange may be the best way to acquire stablecoins. DEXs operate on blockchain networks, allowing users to trade stablecoins directly with other users without the need for intermediaries. Platforms like Uniswap, 1inch, and PancakeSwap provide liquidity pools where you can swap cryptocurrencies, including stablecoins, in a decentralized manner. DEXs offer users control over their funds, reduced fees, and a wide selection of stablecoin pairs. However, it’s important to be mindful of the potential risks associated with interacting with smart contracts and conducting due diligence on the projects listed on DEX platforms.
As stablecoins continue to play a vital role in the cryptocurrency ecosystem, there are several ways to acquire them. Whether you prefer using established cryptocurrency exchanges, exploring peer-to-peer platforms, purchasing directly from stablecoin issuers, engaging in over-the-counter trading, or utilizing decentralized exchanges, the method you choose should align with your needs, preferences, and the level of control you desire over your funds. Remember to conduct thorough research, exercise caution when dealing with unfamiliar platforms, and keep your private keys secure.
If you want to buy stablecoins via P2P, try out OpenPeer. You can trade between fiat and popular stablecoins like USDT and USDC directly from your self-custody wallet.