Steemit Crypto Academy Week 6 - "Stable Coins" [@yohan2on]

leomolina (68)Beginner[2,4,5,6,7,9]in SteemitCryptoAcademy • 4 years ago

For those who are not aware, stable coins are a type of cryptocurrency whose value does not fluctuate and remains fixed between the volatility of the ups and downs of the cryptocurrency market.

Investors can see this type of coins as an instrument of action against the downside threats of large cryptocurrencies such as Bitcoin or Ethereum. The mechanics of these trades make stable coins a safeguard of capital to protect against imminent loss.

An example of these stable currencies is the TETHER.

It is a cryptocurrency whose stable value is anchored to the dollar in a 1:1 ratio. Meaning, one Tether is equivalent in the market to one US dollar.

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Knowing this alternative, we can pose two basic hypotheses that will exemplify the most extreme scenarios of the financial balance:

Hypothetical #1 >> Suppose we have 1BTC at an exchange rate of $50,000:

According to this scenario we would have a credit of $50,000 in favor, but financial statistics forecast a decline of BTC.
The mechanics we would use would be to exchange 1BTC to Tether, which would give us a wallet balance of 50,000 Tether. This would protect our investment while the storm passes, and the value of BTC goes back up. We thus avoid a loss and are at the same time prepared to face the stock market again.

Hypothetical #2 >> Suppose we have 50,000 Tether and the value of BTC starts to rise.

The market forecasts are very clear at the time of making the investment, and when a rise in the value of BTC is approaching, we already know which mechanism we are going to trigger.
In this scenario we would be making a profit from a move that seemed more of a flight than a battle.
And that difference between the selling price and the buying price clearly manifests a net gain on our books.

Now more clearly we could say that the Tether, as a safe haven currency in a volatile market, is a very useful tool for building capital. There are plenty of reasons, mostly financial, why we should use Tether.

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In personal testimony, I have achieved many things thanks to this stable currency, and one of the many situations that can arise was what happened to me:

The internet in the area where I live was failing in such a way that the connection was lost. So I went to my brother's house to borrow his computer and internet connection while I made some transactions. As stocks were very volatile in those days I was afraid of losing what I had earned in a market downturn. Knowing that I was going to be at least a couple of days without being able to connect to check my wallet, I decided to change all the balance I had in STEEM to Tether, and that way I safeguarded my assets.
And guess what happened.... The value of STEEM went down in those and subsequent days, so I managed to avoid a financial loss.

I thank STEEMIT CRYPTO ACADEMY for giving us this window to learn and express our knowledge to fellow members of this community. These activities are beneficial for all of us and will serve as a great tool for us to work further in this parallel world as blockchain is.

I say goodbye to everyone, a big hug and blessings to our teacher @yohan2on for his valuable contribution. I hope to continue participating in these activities in the following weeks. Here I leave a link for you to participate and join this learning challenge: LINK TO PARTICIPATE

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