what is Stablecoins?
Assalamu Alaikum
Stablecoins are cryptocurrencies designed to maintain price stability, usually a peg with an underlying asset. Cryptocurrencies are highly volatile and have a weak unit of account value. Bitcoin is an excellent medium of exchange and store of value, but it will not serve as a reporting currency for financial statement or tax return purposes due to volatility. Merchants who accept crypto have to worry about loss of profit margins if the value of Bitcoin drops rapidly after receiving payment from a customer. The risk of volatility is not understood in the normal course of selling goods and services and this limitation has hindered the adoption of cryptocurrencies. Stablecoins have essentially become the holy grail in crypto, bridging the gap between traditional money and the new world of blockchain and programmable money.
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Types of Stablecoins:
There are two broad categories of stablecoins:
- Asset-backed (more common)
- Algorithmic
- There are two broad categories (with subcategories) of asset-backed stablecoins.
Off-chain parallel (more common) - Fiat currency (more common)
- Products
- On-chain parallelism
- Cryptocurrencies
- There are different ways to parallelize different types of stablecoins and tokens. The simplest version is a USD stablecoin backed by USD or a Euro stablecoin backed by Euro. Stablecoins can be a "basket" of multiple fiat currencies, commodities or other assets. The possibilities for creating stablecoins are almost endless.
Today's discussion ends here. I hope you find it interesting and able to understand. Share your thoughts on today's topic. Wishes and blessings to all. Everyone stay well stay healthy stay with Steemit.
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Very nice explanation about stable coins, and these are easy to understand as well. I really appreciate your effort. Wish you great success bro.
Explained in detail about stable coin which is appreciable, very well explained, thank you so much
Thanks for reading.
The demand for stable coin has been going up since last few years and I expect that this is going to grow a lot and it is very important for us learn understand how it works
You have done well explaining stablecoin with us as well as the different types we have today, nice article.
Your wonderful comment about stablecoins I learned a lot from your post thanks
Thanks for commenting.
In crypto stable coin is very important. Without this stable coin we can not trade properly or may we loss our profits. You post was amazing. Thanks for sharing .
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Nice post about Stablecoins presented. Everyone needs to have a complete understanding of this. A very useful post.