With the gaining crypto surge and how many are selling cryptos, it is quite a wonder to see stablecoin remain stable. Although now it is more about trust and credit of the digital asset. What many cannot move away from is how valid it has become.
Very few assets are as volatile as the stable coin. Moreover, in the last year, the price of Bitcoin soared high before losing half of the value only to bounce again. The value of almost all digital currency continues to go up and down. Although it is a good chance for investors, those who use it for many purposes find it risky. This is where Stablecoin comes in.
What Do We Know About Stablecoin?
As the name suggests, Stablecoin is stable. And that is what makes this particular digital currency very unique. A host of stablecoins are emerging nowadays to serve this need of stability and reliability. It runs on blockchain. Further, it is tied to the value of government-backed money. Some of them are the US dollar or even valuable metals such as silver or gold.
The largest stablecoin markets in terms of capital power are the USD Coin, Binance USD, dai, and terraUSD. Moreover, they are all tied to the US dollar. One must note that the average market value of these coins is more than $100 billion.
Why Should One Purchase Stablecoin?
Nowadays it is the crypto traders who tend to use stablecoins. Those who want to keep their money invested in crypto exchanges without worrying about changes choose stablecoin.
Moreover, it does not need any high fees for cash out as well. Stable coins are also something that you can use to make any transaction between any crypto operations. You can choose to hold on to it without any risk of a volatility rate.
How Is The Government Regulating Stablecoin?
The crypto assets have evaded the regulations set by the US government for so long. Gary Gensler, who is a part of the US Securities and Exchange Commission (SEC) chair, has talked about stablecoins. He said it is “acting almost like poker chips at the casino right now.”
He also said that it may as well qualify as securities in this era. Also, consider the Biden administration as well. They are also working on new bank-like regulations on stablecoins.
How is It Still Stable?
Two of the most primary reasons for the primary stability of the Stable coin are the reserves and the timely market action. We all know how fiat currencies are underlying assets. So, the value remains free from wild swings.
Even in dire situations, the authorities jump into action. They manage the supply of currency so that the price of the digital currency remains stable. The bulk of digital currencies lack key features that make stablecoin stable. It is the reserves and control.
Stablecoin fills the gap where most of the crypto coins fail. That is why many focus on stablecoin than any other digital asset. So, if you desire to invest in digital valuation, think only of stablecoin.