What Is Gemini USD and How Does It Work?
Alternative coins (altcoins) to Bitcoin, such as Ether (ETH), Dogecoin (DOGE), Litecoin (LTC), Binance Coin (BNB), and Cardano (ADA), are highly volatile. Their prices easily fluctuate due to factors such as supply and demand, government regulations, investor/user sentiments, and media hype. Since the values of these cryptocurrencies change almost all the time, an alternative—stablecoins—had to be developed to meet the desire for low price volatility.
Stablecoins offer high value to beginners, crypto enthusiasts, and experienced investors in the digital asset ecosystem. Their prices are pegged to popularly used fiat currencies, such as the United States dollar (USD), the euro (EUR), and the pound sterling (GBP), or to a precious commodity like gold. For that reason, they do not experience high price changes like Bitcoin and altcoins.
The Gemini dollar (or Gemini USD) is a stablecoin that is gaining ground in the cryptocurrency industry. In this article, we will be giving you the most important information you need about it. Read on to find out whether the Gemini USD (GUSD) is worth buying.
What is the Gemini Dollar (GUSD)?
The Gemini dollar, which is also known as Gemini USD (GUSD), is a stablecoin issued by Gemini, a leading US-based crypto exchange. Its price is pegged at 1:1 to the US dollar, which is the dominant fiat currency for international transactions and one of the most stable in the world. The Gemini dollar is backed by a traditional bank—State Street Corporation in Boston.
History of Gemini USD
Gemini USD was launched in September 2018 by the Winklevoss twin brothers, Cameron and Tyler Winklevoss, who are also the founders of the Gemini Trust Company. The stablecoin was developed on the Ethereum network in the standard of an ERC-20 token, and it allows faster transactions and commission-free USD-GUSD trading on the Gemini exchange. Since its release, it has been promoted as a stablecoin that people can trust. Coming from one of the most secure crypto exchanges, GUSD has risen in popularity.
Is Gemini USD regulated?
The Gemini dollar is regulated by the New York State Department of Financial Services (NYDFS). Gemini claims that its GUSD is the world’s first regulated stablecoin, even though another company (Paxos) released its own NYDFS-regulated coin (Pax Dollar) on the same day.
What is the worth of a Gemini Dollar?
Being pegged at 1:1 to the US dollar means that one GUSD is worth one US dollar. Nonetheless, its value might be somewhat greater or lower than the USD depending on market factors. Still, GUSD has remained pegged, making it one of the most reliable stablecoins available.
How Does the Gemini USD Work?
The first step to using Gemini USD is to create an account on the Gemini exchange. This process is free of charge. Users have the option to add two-factor identification during registration, which increases security. The next step is to choose a bank account for sending and receiving USD. They are also required to verify their identities in compliance with KYC and anti-money laundering rules.
When someone buys anything on the Gemini platform, they create Gemini dollars, which are subsequently "redeemed" or "destroyed" when they sell it. In other words, the Gemini exchange will always create a GUSD for a user if they choose to convert their holdings into Gemini Dollars. Any address on the public Ethereum network can receive Gemini Dollars once a verified Gemini user has paid for one. So, the token is completely up to the user, who is free to retain, transfer, buy, and sell it as they like.
Smart contracts, which may be used to store and distribute money based on the developer's instructions, are the foundation of the Gemini dollar. These requirements are met by the Ethereum network, which also offers the conventional ERC20 token standard.
How can I store Gemini USD?
To store your Gemini USD safely, you can rely on the security protocol of the Gemini exchange or transfer it to an external crypto wallet, which could be hot or cold. However, ensure that your choice of wallet supports ERC-20 tokens. Examples of suitable hot wallets for the Gemini dollar are the Gemini Wallet, Coinbase Wallet, and Crypto.com Wallet; while cold wallets include the Trezor and the Ledger Crypto Wallet.
Where Can I Buy Gemini USD?
GUSD can be bought on the Gemini exchange, which is accessible via a secure web browser or the Gemini mobile app. Furthermore, there are many other crypto exchanges that have the Gemini USD listed for sale. They include Binance, Kraken, Crypto.com, and Coinbase.
Where GUSD can be used
The best place to use the Gemini dollar for transactions is on the Gemini exchange, where you will not have to make a crypto-to-USD conversion to engage in the buying and selling of other cryptocurrencies. In addition, you can use GUSD on other crypto exchanges and wallets that support ERC-20 tokens.
What is Unique About the Gemini Dollar?
The Gemini dollar is a unique stablecoin in several aspects. It was created for many different types of payments, high volumes of transactions, and great scalability. In addition, the GUSD is the foremost regulated stablecoin in the world that combines blockchain technology, USD stability, and NYDFS regulation. Moreover, the Gemini USD is subject to regular audits to ensure that it is actually pegged to the value of the United States dollar.
Pros and Cons of the Gemini USD
The Gemini dollar is a stablecoin that has a lot of advantages. However, there are some disadvantages to using this blockchain product. Find the pros and cons of the GUSD below.
Best Gemini Dollar Alternatives
The Gemini dollar is not the only stablecoin pegged to the USD dollar. There are many others similar to it, especially in purpose, which is to provide a stable exchange rate of 1:1 to the United States dollar. So, for interested investors and crypto enthusiasts, the following are our top picks of the best alternatives to the Gemini USD, with introductory notes on each:
Binance USD (BUSD)
Binance USD (BUSD) is the official stablecoin of Binance, which is one of the leading blockchain companies in the world. The co-founder and CEO of Binance is Changpeng Zhao. The company was established in July 2017, while the Binance USD was released in September 2019.
BUSD is issued by Paxos in collaboration with Binance and regulated by the NYDFS. You can purchase BUSD with US dollars after creating a free account with Binance. The platform offers its users zero maker fees, zero transaction fees, more than 300 cryptocurrencies to exchange BUSD, and 24/7 customer support in 40 languages.
Neutrino USD (USDN of Coinbase)
Neutrino USD (USDN) is a stablecoin whose exchange rate is pegged to the US dollar like that of Gemini and Binance. It was created using the Neutrino Wave Protocol in 2019 by Alexander (Sasha) Ivanov, who is the founder and CEO of the Waves Platform, which has been in operation since 2016.
Transactions performed with this algorithmic alternative stablecoin to GUSD are governed by a smart contract on the Ethereum and Binance Smart Chain ecosystems. In addition, the USDN can be used as a savings and trading tool to earn up to 15% APY in the Neutrino dApp. You can buy the Neutrino USD on Binance, Coinbase, and other crypto exchanges where it is listed.
Note: Coinbase acquired Neutrino in February 2019 through a strategic move that would allow it to offer more internationally diverse crypto assets.
USD Coin (USDC)
The USD Coin (USDC) is a digital dollar pegged to the USD to provide a safer, faster, and more efficient method to spend, exchange, and send money globally. It lives 100% on the internet and offers 24/7 access to financial services and cross-border payments by powering many mobile apps.
USDC is another popular alternative stablecoin to the Gemini dollar. It was created and launched in 2018 by Circle, a fully regulated fintech company, through a consortium called Centre. The capabilities of money are enhanced by the USDC in more than 190 countries and territories.
There is no need to wait to complete a transaction or withdraw cash. Using payments that may go around the world and deposit into your account as quickly as email, the USDC renders the idea of settlement times obsolete through its powerful ability to complete transactions in seconds.
In order to provide consumers with real-time payments, trading, and financial services, developers rely on USDC as a key building block for their apps. Imagine the sky with USDC. With USDC, which is available everywhere, you can open up new possibilities in the global financial markets for crypto trading, lending, borrowing, and crowdfunding.
Pax Dollar (USDP)
The Pax dollar (USDP) token, which was initially named Paxos Standard (PAX) until August 2021, is a US dollar-backed stablecoin. It was developed and released by Paxos in 2018.
Paxos keeps some USD and its equivalent in a bank account whenever it releases new tokens. Currently, US Treasury Bills with short maturities are used by Paxos as the USD equivalent. The company's statements are routinely examined by auditing organisations to ensure that they remain trustworthy.
Crypto investors can transfer and store US dollars freely using USDP. It is a token that frees you from the restrictions of traditional banking, enabling you to transact instantly, whenever, and across the globe.
TrueUSD (TUSD)
Designed and launched in 2018, TrueUSD (TUSD) is a fully collateralized ERC-20 stablecoin released by the TrustToken corporation. Its value is pegged to the US dollar. This Gemini USD alternative is being traded on more than 70 exchanges and over 160 markets on five continents.
TUSD is compared to SWIFT, the most extensively used service for international cross-border financial transactions. However, it claims to be more accessible, quicker, and more secure.
Unlike other stablecoins, TrueUSD employs several escrow accounts to prevent abuse and counterparty risk, in addition to having reserves that are legally safeguarded and audited by third-party firms.
DAI
DAI is a stablecoin that offers unlimited trading, lending, and borrowing of crypto assets via the blockchain. Maintaining a one-to-one ratio with the US dollar since its launch by MakerDAO in December 2017, DAI thrives in the growing DeFi ecosystem and is Ethereum-based.
One feature that sets DAI apart from most top alternatives to Gemini USD is its ability to use a variety of cryptocurrencies as collateral, including an altcoin like ether (ETH) and a stablecoin like the USD Coin (USDC). The modern multi-collateral DAI system was nevertheless developed in November 2019.
Tether (USDT)
Finally, on our list of the best alternatives to the Gemini dollar stablecoin is Tether (USDT). Placing it last does not mean that it is a newcomer in the crypto space. In fact, USDT is one of the oldest USD-pegged stablecoins on the market. It was introduced in 2014 by Tether Limited, which is a company owned by iFinex Inc.
Millions of bitcoin participants use Tether every day to trade, hedge, and conduct transactions on different blockchain networks, including Bitcoin, Ethereum, and Tron, without the use of a reliable third-party middleman.
Tether, although being a well-liked option on cryptocurrency exchanges, has a controversial past because of the company's suspected involvement in influencing the price of Bitcoin and improper reserve management.
As compared to other stablecoins, Tether is simpler to use owing to its popularity, impressive market capitalization, and significant trading volume. The majority of the best cryptocurrency applications, for instance, provide Tether for purchase, sale, and trading. Furthermore, you shouldn't have any issues using your Tether USD.
Note: Tether also offers tokens backed by the euro, yuan, and gold. However, USDT is the company's largest cryptocurrency token.
FAQ
A stablecoin is a type of cryptocurrency whose value is tied to that of a fiat currency, such as the USD, EUR, or GBP. The Gemini Dollar (GUSD) is pegged 1:1 to the United States Dollar. Consequently, one GUSD is worth one USD.
You can buy stablecoins from any of the best crypto exchanges in the world, such as Gemini, Crypto.com, Kraken, Coinbase, eToro, and Choise.com (formerly Crypterium).
The Gemini dollar is a secure stablecoin to invest in. It is pegged to the United States dollar and is made to undergo monthly audits by a third-party firm to ensure trustworthiness, value consistency, and compliance with global standards.
GUSD and USDC are different in several aspects. In terms of reserves and liquidity, while only about 60% of the reserves of USDC are in cash, leaving the rest in bonds and debt securities, the reserve of the GUSD is audited every month.
In addition, the market capitalization of USDC is largely higher than that of GUSD. As of January 2023, the market capitalization of USDC was over 3 billion more than that of GUSD, at 43.21 billion and 622.883 million, respectively, according to Yahoo! Finance.
Yes, you will need to pay taxes for trading or investing in stablecoins such as Gemini USD. It is usually known as the capital gains tax. However, whether you will have to pay such tax depends on the regulatory and legal requirements in your country.
Takeaways
One of the first exchanges to obtain official authorization in the United States was Gemini, which launched the GUSD as a unique US-dollar-pegged stablecoin that stands out from the competition. GUSD is regularly audited, so there is no need to worry about its security. Besides, to start using the Gemini dollar or its top alternatives, you can create a free account with any cryptocurrency service provider that you like on our site.
