S4B Crypto Contest - Season 16

Hi
Great minds,I welcome you all to my blog. I will be sharing with us today my general knowledge on what is known as Stablecoins. Stay tuned as we learn together.

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From my research,I have come to understand that stablecoins are the type of unique Cryptocurrency which are made to stand the test of time such as being consistent in value and they are usually tied to a traditional currency such as the US dollar.

When we talk about stability,I can tell you that, that's it's main characteristics and it sets it apart from other Cryptocurrencies. Why, because other Cryptocurrencies are strongly volatile. Now, someone may ask,how do they maintain or achieve this stability? very simple, they achieve this by backing their coins with the equivalent amount of fiat currency or commodities such as gold.

In other words, stablecoins have come to bridge the gap between the traditional finance and the crypto world in general thereby offering a more reliable and trustworthy alternative to traditional Cryptocurrencies.

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Ordinarily, stablecoins are made to maintain a steady value, like I said earlier,most stablecoins are are backed by fiat currency or better still, reserves of real money such as dollars or even euros. And what this means is that,for every stablecoin in circulation, there's also a corresponding amount of traditional currency that is set outside to equally back it up.

In other to still maintain their value,most stablecoins also use smart contract to automatically adjust the supply of coins based on market demand thereby keeping their value stable. Also, some stablecoins use other Cryptocurrencies as collateral and all this are geared towards keeping the value of the stablecoin pegged to it's targeted price.

To the best of my knowledge,the main uses of stablecoins are as follows 👇

▶️ Unlike other Cryptocurrencies that fluctuate, stablecoins are good for everyday transactions such as paying bills, and buying stuffs as their value does not fluctuate.
▶️ Stablecoins makes sending money across boarders cheaper and faster without you worrying about exchange rate volatility.
▶️In trading, stablecoins provide a safe haven for traders to get hold of their money even when they are not actively trading thereby avoiding market volatility.
▶️ Most online business accept stablecoins as payments thereby reducing the risk of price fluctuations.

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Recent discoveries shows that stablecoins have great impact in the crypto world. Stablecoins help the Cryptocurrency market run smoothly by providing a store of value and the affect the market liquidity in the following ways 👇.

Attraction of new investors

As we know, stablecoins offer a less volatile ground for those traders who are very cautious about Cryptocurrency fluctuations, hence increasing participation and liquidity.

Facilitate trading

Stablecoins help traders to to move in and out of positions in an easy way as they are not meant to worry about price fluctuations.

Increase in trading pairs

Stablecoins can be paired with multiple Cryptocurrencies which expands trading options and boosting liquidity.

Reduce Volatility

As the Peggy their value to a stable asset, stablecoins tend to reduce market fluctuations thereby making it easier for buyers and sellers to find each other.

I am inviting @enamul17, @heriadi, @rakiya, and @fombae