The crypto world is already filled with a lot of different kinds of coins and tokens. Utility tokens, security tokens etc. have gotten a lot of heads spinning already, and among these have risen a new breed of crypto coins, the stablecoins. So what are they all about? Are they better than regular cryptocurrencies?
Stablecoins essentially tackle one of the burning issues of the crypto world, volatility. Bitcoin, ethereum, XRP and other major cryptos in the game are the subject of large-scale volatility. Prices fluctuate too often and too much. Stablecoins bypass this issue by having a peg with the fiat currency or some other exchange-traded commodity. By doing this, stablecoins inherit the feature of stability but at the same time, drawbacks of the fiat world also get transferred. Although the features that blockchain presents forward in the form of trust and transparency also get transferred. So are stablecoins better than normal cryptocurrencies?
Henry Stanley, the Chief Executive Officer of ICOAxiom.com recently got in touch with BlockPublisher as he answered this question in detail. He said:
Henry: “Are Stablecoins better than normal cryptocurrencies? Yes and No, That may not be the direct answer you were looking for but I will go over two situations in which where stablecoins are better than cryptocurrencies and are worse then cryptocurrencies.
What it really comes down to what is your intention with stablecoins. If your a retailer selling goods online, you don’t want to be subject to the volatility of cryptocurrencies, a 20% price swing if it goes up can increase your profits, however if it goes down, you may end up getting less money for the item that you sold then what it cost you to purchase it, so in that situation stable coins are better.
However, if you see cryptocurrencies going up 20% a week and want to jump in and hope to catch some of that appreciation, your highly unlikely to get that from stable coins. which makes them worse for investing and trading. Additionally, many cryptocurrencies are used to purchase services from the companies that issue them. If you would like to purchase or utilize the services you would need to exchange the stablecoins for the cryptocurrencies that you desire.”
The issue of volatility that stablecoins tackle might not be that bad at all. Quick price jumps are one of the reasons why people step into the world of cryptos, to gain a quick profit. With stablecoins, this aspect is thrown out of the window. On the other end, stablecoins make the most sense for performing large-scale massive transactions since the price does not fluctuate too often. All in all, stablecoins essentially form the bridge between the fiat world and the world of cryptos. Although they might not be termed as ‘pure’ cryptocurrencies, they sure possess the potential to increase the adoption of the crypto world overall.