S4B Crypto Contest - Season 16
HELLO GREAT STEEMIANS. |
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A very good afternoon my fellow amazing steemians from Nigeria, how are you all doing today? Hope you all had a great day?
You're highly welcomed to my blog once again where, as usual, I do what I do best; feed you with knowledge.
For today I will be sharing my knowledge and opinion with the great steemians in the amazing STEEM4BLOGGERS community on the topic;
STABLECOIN
In this post I'll be sharing my knowledge and general idea about what the term stablecoin stands for, and things I find interesting about it.
WHAT IS A STABLECOIN? |
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The word stablecoin is just a term and idea that actually stands for any cryptocurrency that is designed to have a relatively and predictable stable price, and typically by being attached to a certain commodity or currency or in most cases having its supply controlled by an algorithm.
In a more general and understand defination; stablecoins are a particular type of cryptocurrency whose value is normally tied to another asset class to keep a stable, steady value of the particular coin.
HOW DO STABLECOINS MAINTAIN THEIR VALUE? |
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All stablecoins maintain their value in the market simply by collateralization mechanisms; market security, algorithmic adjustments, and making sure there is balance in the market of demand and supply.
In another word, stablecoins pursue price stability through the process of maintaining and securing reserve and stored assets as collateral or through technical algorithmic formulas that are meant to control supply.
WHAT ARE THE MAIN USES OF STABLECOINS? |
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Like I said earlier that the word stablecoin is just a term used for normal cryptocurrencies, but it particularly stands for coins that have stable potential value.
So with this at the back of our mind we should already know that stablecoins are used the same way normal coins are used, like as a medium of exchange, a store of value, and as a potential trading asset. As for the medium of exchange, normally they are used to make payments, store of value can be regarded as staking, and so.
HOW DO STABLECOINS AFFECT CRYPTOCURRENCY MARKET LIQUIDITY? |
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Stablecoins are vital for the cryptocurrency ecosystem, infact they can be regarded as the most crucial to the crypto space, and this is because they are the main coins that offer stability and value that other cryptocurrencies lack and at the same time requires. And in this way whenever any stablecoin price value is dropped it will affect other mediocre coins, and at the same time when stablecoins increase in value, other coins value thus increase.
OF COURSE! there you have it once again; this is my most delightful entry to this contest. And it's A PLEASURE to know you enjoyed your read. Do ensure to drop a comment if you did and you can also take part in the contest as well.
DON'T FORGET THAT!
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BEFORE I LEAVE
I'd love to invite my friends on Steemit; @vincio-stratic, @oblessgod, and @notable to also come share their stories here.
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