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What are Stablecoins?

Published on
June 22, 2022
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What are Stablecoins?

Cryptocurrency is a fickle market because of the irregularities of the prices as they can go up and down in the next second. Stablecoins are some tokens developed on the Ethereum blockchain. Their values are not concerned by the imbalance of the prices on assets in the crypto market, and solid investments in the background support them.

A famous example of stablecoin is the USDC, a token that relies on entitled dollar assets managed by financial institutions in the US. The background assets are known to the public and certified by an accounting firm.

You are being informed about all these to put your mind at ease that stablecoins are very reliable, and you can go all-in on them.

Why Should You Consider Stablecoins?

Although stablecoins are still new to the crypto world as a concept with undiscovered risks, if you are interested in dealing with cryptos, some of the benefits you'll enjoy from owning a stable coin are as follows.

The first benefit is that you can trade with more peace of mind meaning that you don't need to worry about the fickleness of the crypto market. And as a result of this, it has no link with any agency, and you have complete control over your token.

You have varieties of popular stablecoins with better security for your token. With some stablecoins, you can transfer funds quicker without unnecessary service fees because they are not centralized.

Also, in many ways, they are not considered like other crypto assets because they are made to make their value look stagnant. That is, they would not add value and, most importantly, not lose value. For instance, the USD token is a stablecoin and at no point in time has it raised more than $1 in value. But bitcoin in 2019 was worth $4,000, and in 2021, it reached an all-time high of $60,000.

Moreover, you should view stablecoins like digital cash but still a crypto token if you think of going all-in on cryptocurrency. With stablecoins, you can learn all you need to know about cryptocurrency while protecting your first steps.

Lastly, don't forget that your token would acquire interests far more than what a bank can pay on your savings account. Still, you can transfer as much as you need to without paying heavy fees like paying less than a dollar on a transfer worth millions of dollars in USDC.

Conclusion

Stablecoins are tokens that are sure to keep their value because they are linked with other assets like gold, fiat currencies, or even other crypto tokens. The assets they are linked to are very valuable, which frees them from the general price irregularities. Some are also stabilized with computer algorithms.

You can invest in stablecoins because they don't have enough knowledge about how to trade crypto yet. You are protecting your capital while learning more about the real business by doing this.