Stablecoins

Most of us think that stablecoins are not cryptocurrencies right? As we do not know the reasons for what these are used and for the advantages they have. Is it a cryptocurrency or not? We have a lot of doubts, right? Well then, let’s get them answered in this article more about stablecoins. 

Cryptocurrency prices are not always the same, they keep varying a huge amount in a short period and most people also find this volatility exciting. When we talk about the top cryptocurrencies such as Bitcoin and Ethereum, their prices are up or down by nearly 15 to 20% all the time. But now the point is that, is there any coin that is not volatile? Yes, the answer is Stablecoins. 

So now, what are stable coins? They are cryptocurrencies that do not have any volatility. These stablecoins share great powers as that of the other crypto coins but are highly stable as that of the traditional currency such as the US Dollar and Euro. 

Now, what is the use of these stablecoins? They can maximize the chances of protection from market fluctuations. These are of two types of stable coins one being the national currency backed and the other being the cryptocurrency backed. 

How do stablecoins work? 

Stablecoins are backed by many sources such as fiat currency, other cryptocurrencies, and precious metals. But stablecoins are not linked to centralized financial systems, like a bitcoin-backed stablecoin that may change because there is no regulating body that is controlling what the stablecoin is pegged to.  

Most people are interested in these stable coins as they are built to withstand volatility in a way that other cryptocurrencies cannot yet offer great mobility and accessibility. But other than these, there are other reasons too, such as faster money transfers, keeping financial data private and avoiding financial services fees, and access to financial services without applications. Centralized stable coins can provide a digital option with the backing of a traditional currency. These coins may not be the investment that other cryptocurrencies are as they are built to keep their prices stable not to increase the prices.  

Now, where can you buy stable coins? As you buy other cryptocurrencies, stablecoins also need an account with a crypto exchange or a digital wallet where you can purchase crypto directly depending on the location. Most of the crypto exchange sites such as Coinbase also offer some of the stable coins but such centralized exchanges may list fiat-backed versions. 

Even though stablecoins are safer than other cryptocurrencies, they are still using new technology.  The most popular one among the cryptos is Tether, which is the third biggest cryptocurrency in the world with its great market value. Crypto traders often use tether to buy cryptos as an alternative to the US dollar. This can help them to stay safer in a more stable asset during times of sharp volatility in the crypto market. 

Take Away

Stablecoins are also cryptocurrencies that exist in the crypto market. But the only difference is that they are highly stable, unlike the other top cryptocurrencies that keep varying all the time. Stable coins have no ups and downs, neither they have profits or losses. They are as of the stable currencies.