Bitcoin Forum

What is the best dollar pegged coin? Why is it the best?

Why would anyone trade the BTC/(dollar-pegged-coin) as opposed to BTC/USD? The volume is much lower. There is added risk in holding the dollar pegged coin as opposed to USD itself.

Good question.

In terms of risk all USD options have centralized risk - The bank or exchange where you hold them could run into trouble.

There are only two decentralized dollar pegged options on the market at the moment. BitUSD & NuBits

BitUSD is secured by an average of 300% transparent collateral and currently pays 0.98% yield.
http://bitsharesblocks.com/assets/asset?id=USD
http://whatisbitusd.com/

The value proposition is as the market gets bigger and more liquid we can now start to build a decentralized economy. All alts currently suffer from the same problem volatilty. I personally speculate this is contributing in large part to the BTC downturn (Retailers immediately transfer to fiat to avoid volatility whereas they could keep more in BitUSD and for longer.)

NuBits has a very different system that is running into problems and is currently working on quite a significant fractional reserve basis so is much riskier than even centralized options.

https://nubits.com/

http://bytemaster.bitshares.org/article/2015/01/14/A-New-Perspective-on-NuBits/

You get all of the advantages of a crypto currency (particularly security over private keys) without the volatility of bitcoin. You are also keeping all the value in the crypto space as apposed to putting your money back into fiat. Its a fairly new concept so the volume is still low, but I'd expect adoption to spread as we see lower and lower bitcoin prices.