Steemit Crypto Academy Contest / S8W2 - What are Stablecoins?

Hello everyone I hope you are all ok and enjoy the good life by the grace of Allah Almighty I am here for the participate in the amazing engagement challenge which organised by the SteemitCryptoAcademy the name of this challenge is What are Stablecoins so let's start;

As refers by the word Stable coins means those cryptocurrencey coins that stabilize their market price.Stable coins are the coins that are not too much volatile and did not change their prices rapidly but they maintain the specific price for the long period of time.

Stable coins are those that stable their price value despite of the overall change in the cryptocurrency market.If some little change of the price occurs that did not effect the value of the coins too much.They show the little change in their prices.

Some examples of the stable coins are.

• Tether
• USD
• BUSD
• DAI

There are many kinds of the stable coins that are crypto-backed stable coins,asset backed stable coins etc.Stable coins are always pegged by the reference assets such as the crypto assets or the real world assets .In crypto assets mostly the BUSD is included that is the most known coins or in the real world assets they are pegged by the gold or other precious assets.On the basis of their pegged quality they are divided into different types.I will discuss some types and the way they stabilize the market value.

• Crypto callotrized stable coins: Some of the coins are backed by the cryptocurrencey that helps to stabilise the market value of the Coins .These stable coins are hold by the famous cryptocurrencey such as the bitcoins and Ethereum.There are so many examples in the market.

• Assets callotarized stable coins: Another type of stable coins are back up by the real word assets such as a fait currency ,U.Sdollar or the precious assets of gold platinum etc.These are called as assets backed stable coins.

There are many procedures to ensure the stable price of stable coins in the market I will discuss in detail now.

There are some coins that are not backed up by any asset but different algorithms and computer programs are used to stabilize their prices. These algorithms work by the management of circulation supply of the coin. Management in the supply coin helps to reduce the number of released coin in and stable the price of the coin.In this way the price is stabilize.

Another way to ensure the stable price is by burning the tokens of coin this will help to reduce supply of the specific coin and in a results the circulations of supply is increases that helps to maintain the value of the coin.

As I have discussed earlier there are many coins that are pegged some are by the crypto assets and some by the fait currencies or other commodity assets such as the gold etc.This pegging technique is smart and great technique to ensure the stable prices of the coin in market.

So these are some procedures to ensure the stable prices of the coins in the market.The prices of the stable coins does not decrease too much there is a noticeable change occurs in it.

There are many reasons behind the creation of stable coins as we know that stable coins maintain this stable value in the market and are not too much volatile other coins like BTC etherum changes their market values very rapidly and sometimes the very bearsih trend occurs that causes the loss to the traders to ensure and cope up these lose stable coins are created that do not change its prices while transactions.there change in prices are just noticeable.

The issuers have to backed up some assets to stable the price of these coins such as some are crypto collatrized,or some are assets collatrized like fait currencies or gold,platinum.

The main reasons behind the creation of the stable coins are following.

• Reduce the VolatilityTo reduce the volatility of the transaction these coinsare created.

• Trading These coins helps traders for the more secure and profitable trading due to the stable prices of the assets.

Stable coins are useful in many ways I will discuss some of its major benefits below.

Crypto market is highly volatile the stable coins does not change its value too much there is a little up or down in the value of stable coins that makes them a secure assets for holding to the traders without worry of decrease in their prices.

We can catagarized them as the safe assets for the holding.

Stable coins are also very useful for the trading as we are well known the most famous stable coin that is pegged with US dollar.The are helpful for the trading beacuse the prices of the coins are not too much volatile and we can gain good profits by trading these coins.

In trading or in the enterprises or business these coins are used due to their stabilze nature in the market.Other reason is the fees that other cryptocoins costs a lot while making transactions and stable coins has the less fees.

There are many stablecoins in the market that are known for their stability and many investors used for the trading and holding.There are some famous coins in the 2023 such as TETHER,USDT, USDC, BUSD .These are backed by different procedures of pegging or the algorithm technique.

Most famous and well known stable coin Tether that is backed up by the Usd.It is among the top ranked stable coin and most of the time it is used in the trading.

This is another famous stable coin there is no much volatility in the price.It is the good investment for the traders who are finding the stable coin for their investments.It also comes up with the good profit.

It is the true usd coin that is also pegged by the us dollar for the stabilization of the market price.It is also counted among the top ranked stable coins of the market.

Another good stable coins is the usdc that is used in the swapping or lending etc.It also not much volatile and does not change its value too much.

The stable coin that I used to the most tether that is among the top rank stable coins in the market this is also my favourite due to its stability and less fees in the transactions it is also Backed by the US dollar to maintain its price.

The current marketcap is $71,482,522,823 and it is ranked among top 3 stable coins of the market.I mostly use the Coin for holding and to get the goof profits.

Yes sometimes the stable coins also tend to close their stability of maintaining the price in the market.As we know they are pegged by the assets of cryptocurrencies or real world assets.So sometimes if the issuers are not able to reserve the proper backed up the stable coins may lose their stability and their prices goes down.

There are many such incidents that are happened in the history where the stable coins lose the value and assets goes down the luna incident and that affected the price of UST a stable coin and the down trend of tether some days ago.

Tether is backed up by the U.S dollar and sometimes ago it was not stable due to insuffeicient funds for its backed up.The tether loses it value another example is the DAI that is also the well known stable coin and lose the value some times ago in 2018.

So these are some cases when the stable coins loses its value the reasons behind them are the management issues or the less number of assets that backed up the stable coins whether the cryptocurrencey or the real world assets or commodities.

Although stable coins are very known for their stability in the market there are many advantages as well as disadvantages that I will discuss here.

There are so many advantages of the stable coins including their stability and usage in the trading I will discuss here.

The main advantage of the stable coins is their stable nature .Their is very less volatility in there prices and there trends of the market do not change rapidly.So as compared to other cryptocurrencies it is less volatile and more stable.

They are not too much affected by the trends of the other cryptocurrencies in the market.There high bullish and bearish trend did not affect their prices the most.

Due to their less volatile nature and stability they are used in the trading and holding that is their advantage.

It has the high liquidity and it can be exchnaged very easily as compared to the traditional currencies.This property make them the profitable and good coins for making the fast and rapid transactions.

With their lot of advantages it also have some disad vantage as compared to the traditional fait currencies.

As the stable coins are pegged or backed by the assets of crypto or the commodity there may be issue if there are not much value of the asset available for the backing up.

This might cause the lose of the stabilize nature of the coins and cause the lose of the assets due to the decrease in the market prices.

If some of the coins get collapsed due to the pegging issue it might cause the lose of the whole stabile coin that is the major disadvantage.

Stable coins are centralised means there is the control of the third party.Due to the involvement if third part there may be transactions issues occurs sometimes.There is transparency issues and sometimes the delay occurs in the transactions due to the third part control.

Stable coins are less volatile in nature and maintain their prices even in the high bearish trend of the cryptocurrency market there prices are not too much affected.There are so many advantages of the stable coins due to its less volatility such as its used in the trading etc along with its advantages it also have some drawbacks such as the pegging issues that cause the lose of stability sometimes.The stablecoins are overall the good coins for trading.

Thank you