A Detailed Dive Into Stablecoins #003

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Hello great minds,

It is a wonderful opportunity to come before you all today to discuss on an issue of high significance in the cryptospace.

I trust you are all doing perfectly fine and you are all enjoying your activities in our community today.

In one of our discussions, we learnt about stablecoins and we discussed personally about fiat collateralized stablecoin.

We learnt about the working mechanism of fiat collateralized stablecoin and today, we shall be discussing on its advantages, please follow along

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ADVANTAGES OF FIAT COLLATERALIZED STABLECOIN

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There are numerous advantages of fiat collateralized stablecoin in the crypto atmosphere and some of them are examined below:

• STABILITY:

One primary advantages of a fiat collateralized stablecoin is it's ability to maintain stability, that is, it's ability to be stable despite fluctuations in the cryptomarket.

A fiat collateralized stablecoin provides a reliable store of value of the given token and it is also used as a medium of exchange.

The fiat collateralized stablecoin being backed by fiat currencies is very suitable for everyday transactions and financial planning.

• FAMILIARITY:

Familiarity is another advantage of a fiat collateralized stablecoin, and it is an advantage in the sense that, it becomes more accessible to users.

A stablecoin being backed by a familiar fiat currency attracts so many individuals familiar with the operation of the fiat currency.

And this makes it easier for those individuals to make use of this stablecoin for financial transactions.

• REDUCED VOLATILITY:

A reduced volatility is another advantage of a fiat collateralized stablecoin.

Being a stablecoin, it is not subject to price fluctuations like every other cryptocurrencies.

A fiat-collateralized stablecoin maintains its stability in the face of fluctuations in the cryptospace.

For example, when there is price fluctuations in bitcoin, it affects every other cryptocurrencies in the space except a Fiat collateralized stablecoin and this is as a result of the fact that it is being backed by a fiat currency.

Instead of being manipulated by price volatility, it maintains the price of the fiat currency it was pegged to.

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CONCLUSION

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Fiat collateralized stablecoin is very important in the cryptospace because it maintains its stability, thus making it very fit for financial transactions.

It can be used as a store of value and as a medium of payment.