What is stable coin ?
What is stable coin and other crypto money differ from ? Let’s take a look at the differences of Stablecoins from other cryptocurrencies and try to explain why you should invest in Stablecoins.
All the fluctuations in the cryptocurrency world make everyone on the market looking for ways to find price stability. Traders have had a variety of different options for finding a more stable asset, including repurchase to fiat currency for some time, but how about keeping their assets in cryptocurrency markets? At this point, “Stablecoin” comes into play.
Traditional Cryptocurrencies and Stablecoins
There are always differences between cryptocurrency projects and what certain cryptocurrencies can offer, but Stablecoins offer a completely new advantage over traditional cryptocurrencies. When we compare the two directly, the biggest difference is that the volatility is reduced.
Most investors already know traditional cryptocurrencies. When we look at the history of the movement and the underlying Blockchain technology, we know that the value and price attributed to cryptocurrencies stems from the acceptance of cryptocurrencies in the markets. This causes an open door for hard price mobility.
To better understand the importance of the difference between Stablecoin and traditional cryptocurrencies, investors need to know how cryptocurrencies work. Knowing and understanding the technology behind the new asset class is already a prerequisite for most investors to help them accumulate more information in better investment decisions.
Having grasped the basics of traditional cryptocurrencies, it is extremely easy to understand why Stablecoins exist and why they are needed in the market.
However, the main difference between Stablecoin and traditional cryptocurrencies is that traditional cryptocurrencies are not “supported” by anything like fiat. Instead, the value of the cryptocurrency depends on the availability and acceptance of others.
Unlike traditional cryptocurrencies, Stablecoins offer a new way to protect investors’ funds from volatile markets. Stablecoin offers all the traditional benefits of cryptocurrencies like Blockchain technology, distributed ledger and decentralized network, but with one difference: asset support.
Stable Coins are not only dependent on the benefit and acceptance of their value. Instead, they are like the original fiat currencies backed by gold. Stablecoins are a cryptocurrency that is “fixed” to another asset. This asset may be supported by a fiat currency (such as Tether being tied to the U.S. dollar), precious metals (such as Quintric being tied to gold and silver).
These cryptocurrencies offer significant internal value to each coin and cryptocurrency by representing ownership of another asset. For example, a gold-backed cryptocurrency always represents a minimum amount of value: a special gold value. Supported assets are still worth the amount of gold each represents, even if they are rejected as a whole because of this support.
There are several different ways to operate a fixed asset, but usually there is a certain amount of money for the purchase. The institution / organization that released Stablecoins has the amount of assets corresponding to its value for storage. When done properly, investors can go to the authority and get the crypto money they demand for the tangible asset.
The Importance of Stablecoins
Investors who have a stable price cryptocurrency in a portfolio have the opportunity to protect their investments from serious price movements at uncertain times in the market. These cryptocurrencies play a crucial role in reducing investors and traders.