Crypto For Beginners: What Is Stablecoin?

One of the seas of terminologies you'll run into when you dive into the crypto world is the Stablecoin.

Crypto For Beginners: What Is Stablecoin?

Cryptocurrencies are becoming more and more prominent in the market these days. Low fees, independence from an intermediary, and decentralization are only some of the things that make cryptocurrencies an exciting innovation.

 

Cryptocurrencies also help with international fund transfers. Transferring fiat money from one country to another is not only complicated but also time and fee-consuming. The use of cryptocurrency opens the border to instant and more cost-effective transaction.

 

The only thing that comes in the way of mass adoption for cryptocurrencies is volatility. Ripple, Ethereum, or even Bitcoin might be high above the charts today with regards to market value, but this price can significantly drop in the few days or so due to cryptocurrency's volatility.

 

Another problem would be transaction time. Sure, crypto transactions are much faster compared to ones processed by the bank. Still, if the blockchain gets overloaded, crypto transfers can take a while to push through.

 

It wasn't long before the people behind blockchain decided to innovate the technology. The answer to our far cries is Stablecoin.

 

What Are Stable Coins?

Stablecoins are merely cryptocurrencies whose overall value is pegged on other assets. Examples are Gemini Dollar, Tether, DAI, and PAX.

 

What Makes Stablecoins Stable?

Cryptocurrencies are equipped with several features that fiat currencies don't have. Meanwhile, crypto doesn't have the stability that fiat currencies bring.

 

The functionality of Stablecoins is to combine assets of crypto and fiat in one platform. What makes Stablecoin so stable is that while it holds the power of cryptocurrencies, it also keeps it volatility at a controlled pace.

 

What Are Some Examples Of Stablecoins?

  1. Tether

It is believed that the U.S. dollar backs this Stablecoin, but there are no actual documents to support this yet.

 

  1. TrueUSD

This Ethereum-based blockchain provides legal protection to its users and can be used for third-party audits. Just like Tether, TrueUSD is also backed by the U.S. dollar.

 

  1. PAX

The PAX token is backed by properties. When the value of these properties goes up, so does the PAX token. The token is also free from inflation because it is supported by an actual asset.



Where Can You Store Stablecoins?

You can keep your Stablecoins in crypto exchange platforms and e-wallets such Atomic Wallet, which is a decentralized system with multi-asset and built-in exchange support.

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