Breaking Insight: Why Isn’t My Money Growing?
A common query from a crypto enthusiast recently highlighted a widespread misconception in the cryptocurrency space. A woman expressed confusion over why her $28 in Binance hadn't increased in value. While intrigued by the potential of Bitcoin, she mistakenly believed that USDT, a stablecoin, would yield similar growth. This misunderstanding underscores the importance of knowing the distinct roles and behaviors of cryptocurrencies.
Here’s a clear breakdown:
Stablecoins like USDT are engineered to maintain a fixed value, generally pegged to a fiat currency like the US dollar. They’re not designed for price growth but rather to provide stability in a volatile market.
Altcoins, or alternatives to Bitcoin, exhibit substantial volatility and carry the potential for both high gains and losses.
Bitcoin, the most renowned cryptocurrency, is infamous for its unpredictable price swings, offering lucrative opportunities but with significant risk.
Tokens, including meme coins or NFTs, share a similar volatility profile, making them high-risk, high-reward assets.
If you’ve parked funds in USDT, they will remain stable in value, unless you leverage them for staking or savings programs, which might yield modest returns. Stablecoins are a tool for preserving value rather than for speculative growth, unlike other cryptocurrencies.
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Why Did $28 in USDT Become $20 in My Bank Account?
This is another common concern. Here’s what likely happened: whenever you transact on a cryptocurrency platform, various fees are deducted. These costs, which can range from 0.1% to 10%, depend on the exchange platform and the specific currency you’re converting.
The drop in value occurs due to:
1. Conversion Fees: Every platform charges a fee when you convert crypto to fiat currency.
2. Buyer Commissions: If you’re selling directly to another user, they may impose additional charges.
3. Platform Costs: Whether you’re using Binance or any other exchange, transaction fees are a standard practice in crypto trading.
These deductions are not fraudulent but rather inherent in cryptocurrency trading and fiat conversion processes. It’s important to be aware that converting crypto to real-world currency will often involve small losses, primarily due to these transaction fees. By understanding these mechanisms, you can trade with confidence and manage your expectations.
Remember, cryptocurrency is an evolving space, and staying informed is key to navigating its intricacies effectively.