A stablecoin is the reflection of a real-world currency, crypto coins that are pegged against the US dollar for example will reflect the value of one USD. Crypto traders class stablecoins as a safe investment because your investment will not go up or down, but will stay the same until you re-invest back into Altcoins or Bitcoin.
Stablecoins are great when the crypto markets are in freefall or the crypto markets seem uncertain. The crypto world is either down or up in general, so having a stablecoin will help you shelter against volatility.
Why Would You Use A Stablecoin?
The USD Coin (USDC) is one of the most popular stablecoins due to the fact it’s pegged against the US dollar.
For Example: So on Monday morning your investment (Bitcoin) looks to be hit by a bad day because of negative news coming out for various reasons. To avoid any huge losses you could transfer all your investment from Bitcoin into a stable coin and weather out the storm. So it does not matter if the value of Bitcoin goes down drastically because your funds have been transferred into a stable coin.
Come Wednesday morning Bitcoin is looking to make a comeback, you then re-invest from the stablecoin back to Bitcoin. Once you have transferred your investment from USDC back to Bitcoin your investment will rise when Bitcoin rises.
This is just an example as to why you would use a stablecoin, another reason would be for future crypto investments. You have funds in USDC and you are looking for the right time to invest in Bitcoin or another Altcoin.
Other Stablecoin Usages
- Earn interest on your stablecoins
Transferfunds fast and easily
- Good for international payment methods
- Low transfer fees
How Many Stablecoins Are There?
There are a variety of stablecoins in the crypto markets that run on the Ethereum blockchain. Some are held in higher regard, while others are backed by various cryptocurrencies, gold and other international fiat currencies.
- Binance USD
We would advicse our readers to use USDC as the most stable of all the stablecoins.