Interested In Trading Stable Coins? Here Is A Mini Guide
Every once in a while, a genius comes up with an invention or innovation that changes the course of the way things were before that. This is what happened in the year 2008 when Bitcoin was launched. Bitcoin, a cryptocurrency, was presented before the world, and we realized that it was something we needed but didn’t realize until it was introduced.
Several people faced many difficulties with the traditional mode of payment. They continue to face them even now. Some people did not like the idea of carrying currency notes and coins because of fear of losing them or theft. For women, whose most dresses lack pockets, carrying money was trouble too. Interested In Trading Stable Coins? Here Is A Mini Guide
Apart from that, transactions had limitations. Cash payment for bulk orders and big amounts felt like a task. Transactions with people staying far were difficult too. Although bank transactions existed, they had their limitations. Banks have fixed working hours, and the traditional bank transfers had fixed time slots too.
Apart from cash and bank transfers, facilities like cheques, demand drafts, etc., existed too, but each had some limitations. All of these problems were put to rest with the introduction of Bitcoins.
Interested In Trading Stable Coins? Here Is A Mini Guide
Digital currency changed the course of payments. It made peer-to-peer transactions easy and removed the time barriers as digital payments can be done anytime and anywhere. It made carrying and storing currency easy as Bitcoin is not tangible.
Even though cryptocurrency is becoming popular and is gaining gradual acceptability by both governments of respective nations as well as people across the world, the popularity is comparatively lower due to one main reason: high-risk market volatility.
Cryptocurrencies are volatile and, like all other investment options, are risky too. Due to this risk factor, we now have a cousin of Bitcoin and other commonly known cryptocurrencies. Let us learn about it in detail.
What Is A Stablecoin?
Stablecoin is a class or type of cryptocurrency that, as its name suggests, is stable. Stablecoin is stable in the sense that it is backed by a reserved asset.
Overview of Reserve Assets-
Reserve assets are assets or currencies that can be easily transferred. Reserve assets include currency notes, gold, etc. They are commonly used for balancing international payments and transactions.
Reserve assets have certain qualifications that must be met for a commodity to be categorized as a reserve asset. Contrary to cryptocurrencies, reserve assets have to be physical, controlled by policymakers and authorities, transferable easily, and most importantly, readily available.
Coming back to stablecoins, they aim to offer the best of both worlds, that is, fast and secure transactions, as well as reduce the volatility of the otherwise risky cryptocurrencies.
Some important points about Stablecoins:
- Stablecoins are pegged by reserve assets, unlike other classes of cryptocurrencies that do not offer this feature or protection.
- They can be pegged to a particular currency like the US dollar or Euro. They can also be pegged to any commodity’s price.
- Their stability comes from collateralization and/or through algorithmic mechanisms of purchasing or selling derivative assets.
Why should you buy stablecoins?
If you are willing to make investments or use cryptocurrencies for financial transactions but are skeptical because of the volatility of Bitcoin and other fiat cryptocurrencies, stablecoins can prove to be a good option. Fast transactions complemented with stability and security make stablecoins a great option.
Here is why you should buy stablecoins:
- To reduce volatility- since stablecoins are less volatile, they are a good option for people who are not willing to take too many risks. When investing, people like to think about options that involve fewer risks. The lesser the risk, the better. The reduced volatility makes stablecoins a great option.
- Interest earning- you can earn interest by lending and staking. Staking is a process of verifying crypto transactions. You will earn interest through borrowers when you lend them cryptocurrencies.
- Quick and easy transfers- since stablecoins do not need a bank or banking procedures, it is easy to transfer assets.
Practical Uses of Bitcoins- Here Is All You Need To Know About
Final Words
Based on certain important considerations, it can be stated that Stablecoins are a great way of using cryptocurrencies. You can check the facebook ambitions toward the crypto.
Interested In Trading Stable Coins? Here Is A Mini Guide