Are stablecoins a good investment?

Find out all about non-fluctuating cryptocurrencies

We are not very used to hearing that a virtual currency is stable, as we have a clear picture that cryptocurrencies rise and fall erratically in value, thanks to their market capitalization.

Which is attractive to millions of people around the world.

It already comes as a chip that maintains this characteristic as a normality, especially for those who are a little separated from this financial way of investing.

It's amazing how many people around the world still don't know about these fast-moving digital assets.

Especially since one of them is by far the leader of cryptocurrencies, by volume.

Most Used Stablecoin

A very curious fact is that Tether (USDT), the leading stablecoin, exceeds bitcoin by many numbers in daily transactions, with a total of $71,309,225,196. 14, while bitcoin has an approximate $31,521,775,083.

While USDT remains in the shadows, as many experts claim.

Which seems to be very surprising news for many, but the liquidity and the ways to use this cryptocurrency, makes you understand why it has such a high movement.

If it still doesn't give you an idea of what these assets mean, don't worry. In this article we are committed to providing you with all the necessary information to understand this branch of crypto assets.

Finding out how to invest and why you should do it on something like that Just don't stop reading!

Stablecoin?

The stablecoins did not begin to form now. Since about 2015 they started on the market.

And as their name indicates, they are virtual currencies which have a constantly balanced price and without changes or dramatic volatility.

Its function and the purpose of creation is to maintain a figure close to or similar to a specific physical or technological asset.

Because the value of one thing will always assume the value of another object. This is how it has always worked.

Said object or value under consideration is a unit of measure. And in the world there are several of these forms. How, for example, FIAT money.

What does the value of stablecoins depend on?

There are several answers to this question, and others that will change as this crypto market continues to develop.

Most depend on the acronym USD, that is, the US dollar. Which doesn't seem to be a problem. Because it is the busiest FIAT coin in the world.

As we understand, currencies will not have the same value with respect to a purchase. We can buy a coffee in Mexico City for 40.25 MXN, which in dollars decreased to a number of $2.50.

So, in countries like on the web, these units of measurements are present. Whereas stablecoins take both worlds and merge it.

Cryptocurrencies, following in the area of digital assets, but with the value of the strongest FIAT currencies rate in the world.

At Tether, each of your coins is backed by a physical dollar. Although there are other digital currencies that have their value in gold, diamond or digital assets.

How do they stay stable in such an erratic market?

With the first question, we explain that stablecoins must be kept in an equilibrium, with respect to a balance of supply and demand.

It is understood that if there is demand from many people buying a normal cryptocurrency, its price will rise due to the increase in market capitalization.

But, if all the people who were investing within the asset take out and sell their virtual currencies, the figures and graphs will fall sharply.

To maintain their value, many of the stablecoins have an algorithm that acts practically on its own when these numbers change.

Where, if the currency falls in value, the existing net number of said currency will decrease, disappearing an amount equivalent to the loss.

That is, the coins are destroyed or created to continue to maintain a pendulum of an almost identical equilibrium of the FIAT coin.

So this means that they are not decentralized?

Exactly, they are currencies that depend on a centralized force by governments or private entities, for this reason we cannot call them, with the denomination that we usually have with respect to cryptocurrencies.

And the most famous stablecoins have that particularity, none are decentralized.

It is here when we are presented with the question of: Why do we want something like this if we have FIAT currency?

What are stablecoins used for?

These coins have many uses, living within different blockchains, such as: Ethereum, Solana or Tron. Although there are many more.

Its contribution of value or liquidity makes it the preferred cryptocurrency to buy on cryptocurrency exchanges, since using FIAT money on these platforms is usually more expensive. Due to the fact of having high commissions with respect to this asset.

There are also cases of exchanges or swaps that do not allow the circulation of FIAT money and only virtual currencies are used, as happens in the Pancake Swap platform.

This is why the great popularity of these assets, because it is known that they will not fluctuate and purchases of other decentralized cryptocurrencies will be less expensive.

Keeping it as a checking account for the world of cryptocurrencies.

So it makes these types of transactions easier, making them faster and saving money.

Why invest in stablecoins?

Tether (USDT) as well as USDC or DAI, are good backups to keep a digital dollar without fluctuation. You can rest easy if you want to leave your stablecoins in a wallet or invest in high-volume cryptocurrencies.

But even so, if at any point you want to have that asset in a FIAT currency, they will be easily exchanged.

Because of this and what was explained above, we believe that if you have not used a stablecoin until now, you will use it very soon.

Since it allows you much quieter actions, and within the reach of practically a click.

Technically, we cannot call it investment, because it also means a tool to achieve more reach within the cryptocurrency market.

And you? Do you already plan to use stablecoins?