Stablecoins have gained much attention in the crypto market during the bear run that has been going on for over a year now. Unlike regular cryptocurrencies, stablecoins are backed by fiat or other exchange-traded commodities that make them resistant to the sudden price fluctuations of the crypto world. This makes their use for making large scale transactions and payments almost natural. In fact, all the features of traditional cryptos such as trust, privacy, and transparency are also inherited by stablecoins because the underlying technology is the same, blockchain. So are stablecoins better than normal cryptocurrencies?
Steve Good, a social influencer and a crypto advisor, recently got in touch with BlockPublisher as he answered this question. He said:
To answer your question, stable coins and trading coins in my opinion not really comparable. The reason being is that normally investors are looking for returns which is why one invests in trading coins as you refer to them as cryptocurrencies. But in fact stable coins are cryptocurrencies too. The difference being that they are backed by a physical fiat asset such as dollars to back the Crypto dollar. And their usage is really more important for a few purposes. First off they are useful as a means to trade to a dollar based equivalent when you want to exit your positions and yet remain in crypto. They are also useful for companies or projects that are running in crypto and blockchain but do not want wild fluctuations in the price of how their platform operates.
Now as suggested by Steve, big corporations and companies can benefit from stablecoins because the price fluctuation is not very large. But outside this niche, there is seemingly not much that stablecoins offer.
Adding on to his statements, Steve also:
So in a way I would suggest that stable coins are better than FIAT for being able to do instant trades and transactions within the crypto world. And as we see more types of stable coins in Euro and Pound etc then we will see these coins fluctuate against each other much the way currency trade pairs fluctuate today. And meanwhile I would expect that cryptocurrency project coins will trade much like equities with the upside and downside associated with investment.
Now for some, volatility in the traditional market is not as big of an issue as it seems since it helps make the markets. This is one of the reasons why investors hurl towards the crypto world, to gain profits fast. Although the market has been in a bear run, the bull run of 2017 proved to be fruitful for many.
Instead of comparing stablecoins with other cryptos, one can accept the benefits presented by both these parties in their own separate niches. Stablecoins can help increase the adoption of cryptos in the mainstream financial world as they highlight the benefits of the technology lying underneath the crypto world, blockchain. Trust, transparency and privacy make blockchain attractive to the financial world, and stablecoins can help make that bridge between the world cryptos and the traditional financial market.
SEE ALSO: Here’s Why Stablecoins Are Here to Stay