In this current scenario, stablecoins have attain the biggest growth over the past few years. The total stablecoin market capitalization has risen to an all-time high. In order to live up to their name and proving their value, stable coins are raising however the other digital currencies have fallen during the coronavirus disaster.
Let's dig deeper into the subject to understand what is stablecoin, What are stable coins used for, type and benefit of stable coins, and why they are the top choice for those looking for stability and risk protection.
What are the stable coins?
Stablecoins are cryptocurrencies that provide the same benefits of other crypto coins but with a lot of stability.
In a volatile marketplace, where value can change in an instant, making money with stablecoins can offer security for buyers and sellers. Stablecoins give you the option to ‘store’ your assets without worrying about market fluctuations and volatile shift.
But, what is it that keeps stablecoins to stable? Usually, stablecoins are pegged to commonly used such FIAT currencies, like the US dollar, the Euro or the British pound, and pegged to commodities like gold to avoid fluctuations and volatility.
What are stablecoins used for?
Stable coins essentially provide traders and investors the chance to maintain their crypto portfolio without the need to cash out to FIAT.
Because of their integrity, stablecoins will play a vital role in decentralized finance (DeFi). The idea of decentralized finance is to make a world shift from an archaic, unequal, non-technological system to one that is robust, ethical, and intuitive, that is built on public blockchains.
This is already happening with P2P Lending and investing platforms all over the globe. Stablecoins will be a vital cog in the DeFi machine – after all, people are looking for a stable way to make transactions with each other, while retaining all the great things that crypto has to offer.
Type of Stablecoins?
Here is a list of stable coins depending on their nature:
Centralized stable coins pegged to a FIAT currency: Tether (USDT) and USD Coin (USDC)is the centralized stablecoins that the two new stablecoins on Raise as well as Gemini USD (GUSD). Centralized stablecoins are created by a central organization like company, bank, or government.
Decentralized Stablecoins backed by crypto: The decentralized stablecoins don't have any central authority. Instead, they are controlled by a number of network users. The best example of a decentralized stable coin is Maker DAO (DAI) – the other stablecoin available on Raise. Decentralized stablecoins provide the chance for users to lock up assets to algorithmic blockchain contracts. This means they keep such benefits of stable coins like instant transactions and value security, keeping transparency, and avoiding governance risks.
Decentralized algorithmic stablecoins: This is another relatively new stablecoin, decentralized algorithmic stablecoins depends completely on algorithms to get their value, without any collateral backing.
Which are the benefits of stablecoins?
Stablecoins are stables: Volatility that can be confused for investors all over the globe. As they aren’t volatile, stablecoins offer a safe alternative likes of cryptocurrencies such as Bitcoin. They retain the benefits of blockchain, while grouping to the stable source.
Stablecoins are cost-effective: Without a center point, to help themselves to a big slice of your money, stablecoins can be traded for a low fee. stable coin's peer-to-peer nature makes transactions easy and cheap. So much more so than traditional transactions.
Stablecoins don’t care about borders - Sent via the internet, without regard for countries, banks, stablecoin transactions are fixed and direct. They can’t be changed, blocked, or censored, as they’re based in the blockchain.
faster transactions - Free from the slowing down processes of anti-money laundering and ID verification that hamper traditional banking, stablecoins offer lightning speed transactions. As we mentioned, there is no central authority either – P2P transactions are more direct.
Stablecoins are more transparent - Due to the nature of public blockchains, stablecoin transactions can be monitored by its users and this is maybe the biggest reason for the blockchain revolution, as it offers honesty and accountability, where the traditional system offered an environment where corruption, secrecy, and mistrust thrived.
The boom of stablecoins during the coronavirus disaster
While economic systems the whole world have suffered during the coronavirus disaster, stablecoins are booming.
If you’ve never heard before about stablecoins, simply put, they are cryptocurrencies that offer the same advantage of other cryptocurrencies but with a lot more stability. For this reason, stablecoins have seen the biggest boost in this time of financial instability.
In a volatile marketplace, where currency value can swing in an instant, stablecoins offer security for traders and investors. They give you the option to ‘store’ your assets without worrying about volatile shifts and market fluctuations. In short, stablecoins are exactly the kind of asset you’d want at a time like this.
Why have stablecoins enjoyed such a boost?
Many investors are using stablecoins as a risk protection tool. While the corona disaster causes the biggest damage to societies in many different ways without precaution, people are looking for extra security – particularly financial security.
While some investors are moving their volatile assets into fiat currency, like the US dollar, many crypto investors are looking to USD-backed stablecoins for long term stability. This allows traders and investors to sit tight and plan for the future.
Investors are increasingly looking for stability, as well as ease of use, transparency, and low-cost fees. This is why, for crypto investors entering the era of the stablecoin.
Make your money grow in this time of economic uncertainty – get started with Raise today and take full advantage of the phenomenal growth of stablecoins.
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