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Stablecoins & the Market

Updated: Jul 13, 2022

Have you ever thought of using a Euro in the digital world? One that you’re able to exchange it for other currencies, pay for flight tickets, and transfer some of it to your best friend as a birthday present? We’ve got good news for you because it’s been here since 2015! Before we dive in, let’s go over the basics. Stablecoins are cryptocurrencies that use a variety of methods to keep their value fixed. These different methods are:

1. Fiat-collateralized (backs their price by a currency like the USD or the Euro)

2. Asset-collateralized (backs their price by physical assets like gold or real estate)

3. Algorithm-collateralized (these algorithms or smart contracts keep the price stable by decreasing/increasing supply based on market forces)

4. Crypto-collateralized (backed by one or more cryptocurrencies).

This coin is also part of the DeFi (Decentralized Finance), which makes the world of crypto special by not being controlled by one single organization, cutting out “the middleman”. They are often used in DeFi trades or collateral for lending an borrowing. It has many advantages, such as being able to trade them back and forth for other crypto coins like Bitcoin or Ethereum, make transfers from one wallet to another one without almost no commission, make investments, and even pay for actual things! From insurance, luxury watches, and flight tickets, or withdrawing cash from (specific) ATMs, the world is starting to adapt to the world of cryptocurrency.

Regulations play a central role in facilitating any type of activity in the crypto world. For everything to work out as smoothly and effectively as everyone would like to, both the government and companies must collaborate to avoid harming each other. There are plenty of things that we as users and governments or organizations can benefit from a DeFi. The innovation that this system brings is exceptional. It will contribute greatly to our future with all the different benefits we previously mentioned. In addition, it is indeed a very safe and fast way to do any type of transaction.

The world needs to try to keep this in mind. The benefit of cryptocurrency comes from the idea of not having imposed regulations in the system. If done correctly and the industry collaborates, regulation won’t kill the uniqueness of the DeFi that makes it so attractive in the first place.

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