A Detailed Dive Into Stablecoins #009

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Hello great minds,

I am here again, as usual, to discuss with you all on an important topic in the cryptospace.

I trust you are doing perfectly fine and you are enjoying your activities in the community.

I come before you today with a happy heart to discuss on the topic of stablecoins in the cryptospace.

In our last discussion on stablecoin, we discussed elaborately on fiat currency which is very important in a fiat collateralized stablecoin.

Today, we shall not be taking much time as we shall begin our discussion immediately.

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ADVANTAGES OF FIAT CURRENCY

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There are some unique properties of a fiat currency which makes them very useful for backing up stablecoin and we shall be examining some of these advantages.

• GOVERNMENT BACKING:

One major advantage of fiat currency in the cryptospace is that fiat currency has the backing of the government.

This backing of the government on fiat currency helps to instill the trust and confidence of the nation on the currency.

And with this trust and confidence, fiat currency will continue it have a good value in the eyes of the nation.

• STABILITY:

This feature of fiat currency is what makes it useful in backing up coins which makes them stablecoin.

Fiat currency is stable across the world and is also used as a store of value.

Without it's stability feature, it will not be used as a store of value neither will it be used to back up cryptocurrencies.

• LEGAL TENDER:

Being recognized as a legal tender is one of the advantages of a fiat currency.

Being recognized as a legal tender means that it can be used to make payment, settle debt and also facilitates financial transactions.

For a commodity to be accepted as a legal tender, this means it is legally accepted in a specific region to be a legal means of payment, or a legal medium of exchange.

When one make use of a commodity that is not acceptable as a legal tender, he might get himself arrested by the authorities.

• PORTABILITY:

Portablilty is another advantage of making use of a fiat currency.

Being portable implies that the currency can be carried about easily and be used for daily Financial transactions.

When it is not portable means it is very heavy and cannot be carried about.

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CONCLUSION

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The use of fiat currency is very important in the operation of a fiat collateralized stablecoin.

Without the use of fiat currency, it becomes impossible for a fiat collateralized stablecoin to attain stability.

In our next discussion, we shall learn more useful tips on stablecoins.