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Stablecoins


For more than three years, the crypto market has suffered the results of scandals, crashes, rumors and prohibitions. All of those events continue to add daily volatility to the market, scaring many investors of entering the game.


However, 2019 set a new tone, as stablecoins has emerged as the perfect solution to the problem of transparency, security and privacy. Those assets enjoy many of the advantages of being a cryptocurrency, but does not get affected by volatile movements.


Stable cryptocurrencies are coins with almost non-fluctuating values. Those coins are usually synonyms of stability inside the crypto space and represent a solution against price fluctuation. Those coins are usually pegged to other recognized and stable assets such as the Dollar or even Gold.


Those assets have the same features of the rest of the digital coins, simplistic and scalable. The creation of stablecoins are a tremendous boost for the industry, as they will accelerate adoption. For instance, many retail businesses didn’t want to use BTC and other cryptos due to the lack of stability in its value, now, they have found a way to enjoy innovation without being exposed to risk.


Among the most popular use cases of those stablecoins are the following:

  • Performance measurement

  • Remittance

  • Store of Value

  • Medium of Exchange

  • Unit of Account

  • Pegged lending

  • Smart insurance

As expressed a few paragraphs above, many of the stablecoins available in the market have collaterals (meaning they are being backed by real fiat currencies like the US Dollar, the Euro or the Sterling). Most of them, hold reserve equal to the amount of coins in circulation. In other words, those assets are backed at a 1:1 ratio (one stable coin will be equal to one unit of fiat).


Some of the most used ones are the US Tether (USDT), TrueUSD (TUSD), GeminiDollar (GUSD), USD Coin (USDC) and Paxos Standard (PAX).


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