If you have been interested in cryptocurrencies recently, you might be well aware that there are different kinds of digital currencies. If you are a newbie in the crypto trade market, you might not be mindful of the volatility factor. One of the most important factors you should know before investing in cryptocurrencies is that the market is quite volatile. In simple words, the market value of all the digital currencies keeps on fluctuating from time to time.
You might invest in one of the popular cryptocurrencies one day with the expectation of getting high returns. But somehow, the investment might be a significant loss for you because of the sudden drop-in rate. Check this link trustpedia.io/crypto/ , you can learn more about bitcoin.
But worry not, as other alternatives can save you from such tremendous volatility of the cryptocurrency trade market. These rescue coins are popularly known as Stablecoins. If you want to know more about these digital assets, keep an eye on the following article!
Why should you choose to invest in Stablecoins?
The present cryptocurrency market lies sensitive right now. People face terrible losses from their investments due to the recent trade market breaches and random cyber-attacks from hackers. In such situations, if you still want to earn something from your cryptocurrency investments, then you can learn the knit and bits of Stablecoins.
As the name suggests, stablecoins help keep the cryptocurrency trade market stable to some extent. The market has got different types of stablecoins in the present world. If you are not aware of those yet, check out the points below!
- Fiat-collateralized stablecoins:
This is the first type of Stablecoin that the cryptocurrency trade market got in touch with. These coins follow specific rules and regulations, which keep their value the same as any fiat currency like Dollar. These coins come with specialized coding, enabling them to hold their market value higher or equal to $1. You can use these stable coins like Tether for funding your digital wallets to buy popular cryptocurrencies in the world like Bitcoins.
- Crypto-collateralized Stablecoins:
As the name suggests, these stablecoins are indirectly or directly related to one of the popular cryptocurrencies. The developers of crypto-collateralized stablecoins enable you to invest in something stable whose value would not fall easily below $1 at any point in time. At least, it would provide you with a lot of time to sell your cryptocurrency shares in the trade market before you face any losses. Once you start noticing the fall in the rate of these stable coins bit by bit, you can easily trade out everything you have or a chunk of it to avoid losses.
- Non-collateralized Stablecoins:
Another fascinating stablecoin is the non-collateralized one which is nowhere related to the fiat or cryptocurrencies. These coins are generally designed in a particular manner where they depend on any centralized federal banking sector. Its value rises sometimes and falls below $1 other times. But unlike other cryptocurrencies, its value does not stay at $1 for long. As it keeps on functioning on the rules and regulations of federal sectors, its value rises again.
Advantages of Stablecoins
‘Stablecoin’ is not as popular as ‘Bitcoins’ in the cryptocurrency trade market. However, they play a significant role in maintaining the balance in the crypto trade market. If you want to know the benefits of using Stablecoins instead of your Fiat currencies, here they are:
- Crypto economy factors:
The crypto economy is the platform where you get to carve out new cryptocurrencies following the basic rules of crafting coins. If you purchase various stablecoins from this platform, you can easily fund your digital wallets at low fees. Such transactions only remain between the investor and the receiver, thus making you anonymous. You can also perform a stable and secure transaction without fear of losses!
Stablecoins are one of the rare cryptocurrencies that many business brands, industries, shops, and restaurants tend to accept as their payment methods as it is almost equivalent to fiat currencies. In simple words, you can use these stable coins to make physical purchases at ease.
- Rules and regulations:
The market value of stable coins stays intact most of the time because it follows the norms and regulations of centralized federal sectors.
If you follow all the above points quickly once, you will understand a huge part of the Stablecoins’ popularity among the masses.