What are stablecoins and why are they so popular?

what are stablecoins and why are they so popular

Sumary of What are stablecoins and why are they so popular?:

  • NEW DELHI: The cryptocurrency gamble and volatility isn’t for everyone where prices of coins rise and plummet abruptly, making investors rather jittery.
  • This makes them less prone to significant drops in value and keeps the prices stable.
  • Other cryptos, such as bitcoin, aren’t pegged to a stable asset.
  • The difference is that their value is pegged 1:1 to a financial asset outside the world of crypto, usually the US dollar,” explains Jean-Philippe Serbera Senior Lecturer, Sheffield Hallam University.
  • The biggest USPThe biggest USP of stablecoins is that they are built to withstand volatility in a way that other cryptocurrencies aren’t.
  • This feature makes stablecoins an ideal safe haven asset because, unlike cryptocurrencies like Bitcoin that can fluctuate dramatically in price every day, an individual using stablecoins to store value see no risk of loss, especially because they have custody of their assets.
  • Though Bitcoin is still the most popular cryptocurrency, suffers from high volatility in its valuations.
  • For instance, it rose from $5,000 at the height of the pandemic sell-off in March 2020 to almost $65,000 in April 2021 before plunging by over 50% to around $30,000 in June 2021. The price has since exceeded $65,000 in November 2021. This kind of short-term volatility makes Bitcoin and other popular cryptocurrencies unsuitable for everyday use.

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