All You Need to Know About Stablecoins

Blockchain and cryptocurrencies are on the rise. And this year has seen some new all-time highs and records as well. So if you’re thinking of investing in a useful asset, cryptocurrencies like stablecoins might just be the right one.

But wait! Isn’t the crypto market known for its volatility? If that’s what you’re thinking, don’t worry. Stablecoins can prove to be a useful asset and help to manage market volatility as well. So, it’s basically killing two birds with one stone. Without further redo, let’s get to know all about them.

Here’s a Crypto Primer

Talking of cryptocurrency, it is basically a digital form of money based on the blockchain structure. In recent times, there is much hype about such currencies as people are becoming more and more aware of the benefits that come with the use of cryptocurrencies.

Decentralization is one of the main points of the ever-increasing globalization and adoption of these digital currencies. That’s why cryptocurrencies are rapidly becoming a valuable asset in these modern times.

What are Stablecoins?

There are dozens of different cryptocurrencies all around. Among these are stable coins as well. Let’s know what these coins are and how they can be useful.

A stablecoin is also a digital currency but how it varies from other cryptocurrencies like Bitcoin is that it’s backed by another valuable asset like fiat money or gold. It can also be backed by other valuable cryptocurrencies as well.

CompoSecure’s Adam Lowe shared his thoughts on stablecoins,

“Stablecoins are a type of cryptocurrency that is designed to maintain a fixed value, often pegged to a fiat or government-backed security”.

Having stable or government-backed assets at their back, stablecoins can manage the highly volatile market of cryptocurrencies. For those who stay away from digital currencies due to unexpected turns and changes, stablecoin is the perfect choice for those of our friends.

What’s Their Use?

Stablecoins are majorly used for global payment transfers since they offer a much cheaper and faster way for withdrawals and deposits between fiat cash and digital currencies.

The crypto expert of Coinbase, Nemil Dalal, shares his thoughts about stablecoins’ usage,

“One of the most powerful uses of stablecoins is payments”

Another most important usage of such coins is that when the crypto market seems to go down, crypto investors can transfer their money to stablecoins and wait for the perfect time when the market becomes stable to invest in it again.

This way, stablecoins prove to be a safe harbor for the crypto investors to which they can turn whenever they fear the market’s gonna come down.

Having high liquidity and a great ability to trade, stablecoins are way easier to exchange for fiat currencies or other cryptocurrencies. Since the exchange of other cryptocurrencies is not much easier due to the volatility, stablecoins have an upper hand in this regard.

Endnotes

So this was all about the basics of stablecoins and their use. Now we know that using stablecoins is actually a low-risk way of profiting from all the crypto benefits as well as making money. So, if you’re not that good at taking risks but want to start your crypto journey, you can begin with stablecoins.

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