A Detailed Dive Into Stablecoins #008

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Hello Great Minds,

With a happy heart I humbly come before you all today to discuss on an issue of great importance in the cryptospace.

I trust you are doing perfectly fine and you are enjoying your activities in the community by commenting on one another's post and also promoting steemit across various social media platform.

I am here today again to discuss on another interesting topic in the cryptospace and this topic is a fundamental concept of fiat collateralized stablecoin.

We have examined few concepts and today we shall continue on our understanding of fiat currency, please stay tuned.

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ADVANTAGES OF FIAT CURRENCY

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In our last discussion, we learnt about some key characteristics of fiat currency and today, we shall be discussing particularly on the advantages of fiat currency.

• FLEXIBILITY:

The government ate offered flexibility by fiat currency to respond effectively to various economic conditions.

Central Bank can influence some major economic conditions such as inflation, unemployment by adjusting the interest rates on fiat currencies.

Due to the flexibility of fiat currency, the government can regulate its supply, when the economy is in inflation, the government can regulate the supply and flow of currency to balance the economy.

And when the economy is in deflation, the government can also regulate the supply of fiat currency in a way that it counter-balance the current economic condition and make it better.

• EASE OF USE:

Another advantage of fiat currency is the ease to which it can be used.

Fiat currency is being accepted everywhere as a medium of exchange and a means of payment.

It is also very portable, that is, it is easy to carry around as it has a very light weight like paper.

Another quality of fiat currency that makes it easy to use is the fact that it is highly divisible.

Fiat currency can be divided into smaller units of value and this eliminate the need for carrying bulky commodities.

• GLOBAL ACCEPTANCE:

Another advantage of fiat currency is that many of them are accepted worldwide across the globe.

Fiat currency are mostly used in facilitating cross border transactions or we can call it international trades.

Taking the US dollar for example, it is a dominant global reserve currency and it accepted across the world.

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CONCLUSION

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We have examined some advantages of fiat currency and we must have been able to deduce some reasons it is being used to back some stablecoins.

In our next discussion, we shall learn more about stablecoins, please stay tuned.