As more people start investing in cryptocurrencies, coins other than Bitcoin (BTC) are becoming more relevant. For example, Ethereum (ETH) has established itself as the second most popular cryptocurrency in the world. Other cryptocurrencies have become widely popular too. Some cryptocurrencies have even surpassed the profitability of Bitcoin. Ethereum may be one of such cryptocurrencies soon.
Ethereum has had an excellent price-performance since the second half of 2020. Its bullish trend has outpaced Bitcoin’s. As a result, Ethereum may become the most valuable cryptocurrency in the world instead of Bitcoin. Likewise, other sets of cryptocurrencies known as stablecoins are gaining popularity. Among them, Binance USD (BUSD) stands out.
Among active traders and investors, BUSD and ETH have formed a popular crypto pair. There are BUSD to ETH swaps and the other way around on the exchanges that list these two coins. Why have these cryptocurrencies become a promising pair for 2022? To understand it, we need to know the characteristics of each of these two coins. So, let’s begin.
A Brief Introduction to Ethereum
Ethereum is an open-source blockchain. It is decentralized and serves as a platform for other cryptocurrencies. It also issues its own cryptocurrency, Ether. The Ethereum blockchain offers many more functionalities like smart contracts and other decentralized applications (DApps).
One of the co-founders of Ethereum, Vitalik Buterin, outlined this network in a white paper released in 2013. The initial coin offering (ICO) for this project was very successful. It sold 60 million ETH coins at $0.311 each. As of the end of November 2021, the price of each Ether coin exceeds $4,000. Such a price increase makes Ether one of the most profitable crypto investments.
A Brief Introduction to Binance USD
Binance USD is a stablecoin, which is a cryptocurrency with its price pegged to a stable asset. In this case, BUSD mirrors the price of the American dollar (USD). The circulating supply of this stablecoin is backed and collateralized by USD funds.
Stablecoins help to minimize the negative effects of price volatility, which is common among cryptocurrencies. Most cryptocurrency exchange rates vary widely and this feature can be a disadvantage sometimes. Contrastingly, Binance USD keeps a fixed exchange rate to the American dollar.
Binance USD is not the only stablecoin available. Examples of other stablecoins are Tether (USDT), USD Coin (USDC), Dai (DAI), and several more. So, why BUSD is so popular among crypto investors, and in particular with ETH holders? There are some important reasons:
- Binance USD was initially issued as an ERC-20 token running on the Ethereum platform. This feature allowed ETH holders to store BUSD coins in the same crypto wallet.
- BUSD coins are backed on a 1:1 basis by USD funds, which make the stablecoin quite secure.
- Binance USD is approved by regulators in the United States. Therefore, this asset can be used in smart contracts for institutions and enterprises.
In light of these reasons, the BUSD-ETH crypto pair will continue to be popular in 2022 and the next years.