Stablecoins entered the market of cryptocurrency in 2014, with the stated objective of protecting users from high volatility for Bitcoin and Ether without having to cash out to fiat. Before the arrival of Stablecoin, the market is ruled by a volatile currency that is not considered safe enough to invest in the market due to its unstable value.
Though, the digital currencies also came with the objective of eliminating the role of the third party in the transaction process. It hits the market with the leading position and objectives that shifted the interests of the investors. New crypto users are often concerned about intangible assets not being backed by anything.
The reliability and stability of Stablecoins are highly trusted for global payments and transactions. Fiat-backed currencies are considered the prime focus for international transactions with low transaction costs and easy to convert fiat value to crypto. It is evident that Stablecoins have a lot of promising features that can transform conventional financial systems, processes, and infrastructure.
Making a payment exposes users to potentially significant losses (or gains), especially with Bitcoin, which takes more than 1 hour to confirm payments.
What actually Stablecoins are?
The most recent yet highly productive interventions in the domain of cryptocurrencies are referred to as Stablecoins. The introduction of Stablecoins proves to be quite influential in addressing price stability concerns for cryptocurrencies. Considering the fact that they resolve one of the issues with cryptocurrencies, Stablecoins features are backed by fiat currencies. But its stability is approaching far more advancement.
Stablecoins, a fast-growing medium of exchange in the spheres of crypto, has emerged as the most secure and stable asset for performing global transactions, often used by traders seeking to move funds around. For example, trading Stablecoins for bitcoin is easier than trading traditional money like U.S. dollars for bitcoin.
The increase in the popularity of Stablecoins in recent years has been an instrumental factor in encouraging learners’ interest in the properties of Stablecoins. Why? If you are following the crypto space, you must be aware of the latest news in the spheres of stability mechanism crypto. The following discussion would help you find the important traits and upcoming advancements of Stablecoins. Thus, keep reading the blog to understand them better.
Gold Backed Stablecoin Development
Gold-backed coins are the latest variants of “Stablecoins,” which are typically pegged to the dollar to curtail volatility. The largest, Pax Gold or PAXG, has jumped 7.4% in 2022, while main rival Tether Gold has leaped 8.5%.
By contrast, Bitcoin has lost over 13% and ether is down 20%.
Although gold-backed coins remain a niche novelty on the crypto market today – PAXG and Tether Gold are just over two years old – with thin liquidity and little certainty about their long-term future.
Stablecoins Utility and Advantages
As we’ve seen, asset backed cryptocurrency is launched for the users who have a main interest in securing their capital and operating without high fluctuation risks or losses from transaction fees. Some of the outstanding advantages of Stablecoins are listed below.
● Medium of Exchange and Store of Value
One of the immediately apparent advantages of Stablecoin technology is its medium of exchange, which effectively bridges the gap between fiat and cryptocurrency. Stablecoins can achieve a utility that is completely independent of cryptocurrency ownership by minimizing price volatility.
● Commodity Backed Stablecoin
A Stablecoin backed by a physical asset such as precious metals, oil, or real estate is called a commodity-backed Stablecoin. The precious metal that is widely collateralized is gold; Tether Gold (XAUT) and Paxos gold (PAXG) are two of the most liquid gold-backed Stablecoins. But here one thing is very important to remember the price of these commodities such as silver stablecoin can be likely to fluctuate. As a result, they have the potential to lose value.
● Unit of Account
The most important aspect of Stablecoins is that it offers stability in how they work as a unit of account. The pegging mechanism of Stablecoin has the potential to become an independent unit of account globally.
● Interoperability with dApps
Another important addition among Stablecoin features refers to the flexibility for using Stablecoins with other dApp. They can also offer better infrastructure management opportunities if they are interoperable with decentralized applications.
● Performance Measurement
Another prolific entry among the stable coin traits is its accuracy in financial performance valuation. Gold backed Stablecoin development takes away the volatility and ensures promising improvements in accuracy for the assessment of the performance of projects.
Concluding Thoughts
As we’ve seen, Stablecoins prove to be a breakthrough for users who want to secure their capital and operate without high fluctuation risks or losses from fees.
Since Stablecoins came to market, a huge interest has developed in the features and functionality of Stablecoins. They introduced the much-needed stability in crypto to demonstrate that they can also serve as a vital instrument in financial exchanges.
If you want to get benefited from the Stablecoins, you can avail the Stablecoin Development Services from Hashlogics. We offer our services to give you a remarkable profit-making experience.
