- The most widely utilized stablecoins are dollar-pegged.
- Stablecoins made it easy to transfer funds between crypto exchanges.
Stablecoins are crypto-equivalent to fiat currencies like the dollar or the rupee, and it had to be something that could consistently retain value over time and be readily transferred. For example, a system allows Bitcoin investors to convert their Bitcoin earnings to dollars immediately and subsequently invest or withdraw them to their bank accounts. So the stablecoin was created to overcome these difficulties.
Stablecoins are fantastic for trading since, unlike stock markets, crypto trades 24 hours a day, seven days a week. Suddenly, investors could ‘cash out’ and go to bed without worrying about their crypto investments. Stablecoins made it easy to transfer funds between crypto exchanges and avoid lengthy banking processes.
Stablecoins also allowed investors to maintain a portion of their crypto portfolio like cash, allowing them to buy whatever coin they wanted without relying on their banks’ servers, which were known to go down for maintenance.
Dollar-pegged Most Widely Used
Already valued at roughly $130 billion, the stablecoin market has doubled in the previous 20 months. Stablecoins are used in crypto trading and lending. Over 75% of all crypto trading platforms traded between stablecoins and other tokens in October while only making up 5% of all crypto assets. Stablecoin supply reached $150 billion in November, according to CryptoRank.io.
Total #Stablecoin Supply Crosses $150 Billion in November
— CryptoRank Platform (@CryptoRank_io) November 26, 2021
Because of the present financial system, the most widely utilized stablecoins are dollar-pegged. Many stablecoins are tied to other fiat currencies like the Euro, GBP, IMF’s SDR, commodities like gold, or even other cryptocurrencies such Wrapped Bitcoin.
Tether, for example, was created in 2014 as RealCoin. Tether’s supply is limited solely by declared dollar reserves.
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