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Stablecoins and the Part they Play in Trading Cryptocurrency


Stablecoins and the Part they Play in Trading Cryptocurrency

BitXmi experts explain why blockchain needs digital coins tied to real or tangible assets and discusses their advantage over conventional cryptocurrencies.


In the world of cryptocurrencies, there are digital coins, the value of which is tied to a specific physical asset. The first such digital currency, USDT from Tether, appeared in 2015. It is pegged to the value of the US dollar in a 1:1 ratio. Since then, the number of stablecoins has increased exponentially.

Blockchain and the real world

In the real world, people use fiat currencies as a settlement instrument, but the blockchain does not understand what the euro or the dollar is. Instead, it has its own metrics – block sizes, number of transactions, hash rate, etc. According to BitXmi experts, stablecoins were created to bring the blockchain closer to a greater understanding amongst people and make an asset with the ability to function as a traditional currency.

In addition to being pegged to fiat currencies, stablecoins can be connected with precious metals, natural resources, securities, real estate, and other physical assets; favorably resulting in less perceived volatility.

How Does the Investor Benefit?

In the cryptocurrency market, stablecoins act as a buffer through which owners of large capital can enter the cryptocurrency market. This is convenient as traders can turn a substantial amount of normal money into stablecoins, at once.

The inverse of this situation would be when an investor has a large sum of cryptocurrencies and does not want to lose money on the volatility of its rate. He will then convert the cryptocurrency into stablecoins, and wait out the suspense on the crypto market. Another advantage of stablecoins is that this type of asset can eventually become an alternative to the usual fiat currencies in countries where the exchange rate of the national currency is unstable.

“These assets can become a transitional option for settlements in unstable economies, where ordinary fiat money often quickly decreases in value,” – BitXmi experts explain.

On the grounds of this, it is safe to say that the popularity of digital assets created on the basis of real material wealth, will only increase in the future.

We remind you that on the BitXmi crypto exchange, futures trading with a leverage of 125% is available. Come in and get profit now.

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Disclaimer: Bitxmi News is a news portal and does not provide any financial advice. Bitxmi's role is to inform the cryptocurrency and blockchain community about what's going on in this space. Please do your own due diligence before making any investment. Bitxmi News won't be responsible for any loss of funds.

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