What are stablecoins?
Stablecoins are price-stable cryptocurrencies, pegged to an asset (usually fiat currencies, such as USD, EUR etc).
Stablecoins maintain the value of the asset’s unit they designed to track.
Stablecoins combine the advantages of cryptocurrencies and fiat money, removing some of the disadvantages of the latter, while still keeping others.
Advantages innate to stablecoins :
Price stability – stablecoins maintain their value and are immune to market volatility
Advantages innate to cryptocurrencies :
Full control – nobody other than the owner controls their stablecoins
Ease of use – to transfer stablecoins you only need receiving address.
Cheap – cryptocurrency transactions are usually much cheaper than traditional bank transfers.
Fast – cryptocurrency transactions are much faster than traditional bank transfers.
Decentralized (not all types) – some stablecoins are fully decentralized, meaning there is no single entity in control of the system.
Full dependance – stablecoins reflect the value of an asset, thus making them vulnerable to all the outside factors, affecting the asset (central bank monetary policy, inflation, etc in case of fiat tracking stablecoins)
Bad investment – immunity to market fluctuations, while eliminating downside, also means there is no upside relative to the tracked asset.
- Oracle problem –
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