The digital market is searching for positioning as an alternative to the traditional market that unfortunately is becoming more devouring by increasing the levels of money generation through Fiat currencies.
The currencies used in the traditional economy enjoy acceptance and trust when used as a payment method; these characteristics strengthen their use and value, but, on the other hand, the digital market arises, which is in a constant struggle to reach the general support of the people.
It is where the need arises to create a digital currency that gives future users the necessary confidence to carry out financial operations and exchange operations with comfort, security, and, above all, trust using https://q-profit-system.com/.
Cryptocurrencies have created significant controversy, where half of the opinions are in their favor and the other half against; all this has significantly affected the development of the digital market and the various cryptocurrencies that are developed in it.
In this constant search to satisfy the needs of all users, cryptocurrencies are redesigned, and a new project is developed, but this time with a guarantee in some asset or currency of the traditional market, and that is where stablecoins come from.
Stablecoin Definition
They are cryptocurrencies developed to remain stable during the investment period; their price varies less than traditional cryptocurrencies; consequently, they represent a Fiat currency but in the Blockchain.
Stablecoins aims to reduce the risks and volatility of cryptocurrencies while maintaining their value.
On the other hand, the value of stablecoins is much lower than the value of cryptocurrencies; their greatest virtue is the guarantee granted by the currencies or assets that support them.
The interest in the use and management of cryptocurrencies is increasing not only by individuals who wish to invest in this new digital market but also by official and corporate entities.
That is why many of these users prefer to opt for the safest option to start their investments, granting specific stability to the capital invested betting on better results in asset-backed currencies.
Stablecoins could be considered a combination of public (Fiat currencies) and private (cryptocurrencies) interests seeking to keep their value stable in a fluctuating market.
Creation of stablecoins
Although cryptocurrencies have a constant struggle with their volatility, they have not stopped attracting the most significant number of users, which is why stablecoins are created.
Given the need for digital currencies to control the instability in their value and the constant changes to which the digital market is subject, it is found that backing their value to a traditional asset is the easiest way for new investors to adopt this unique market insight.
Traditional uses of stablecoins
- As a Global Medium of Exchange
It constitutes one of the forms of traditional use, where this type of digital currencies would allow strengthening the markets hard-hit by the conventional economy, such as the impact of inflation.
- Decentralized Financial Transactions
What is innovative about cryptocurrencies is that their transactions through the Blockchain platform are fast and with meager costs, which is contradictory for financial entities, which base their financing on the collection of commissions.
In many cases, these commissions are incredibly high, which makes many users fear when carrying out an operation because they assume that its costs can be increased.
In addition, investment operations in financial institutions are inaccessible to small and medium-sized companies, much more so to individuals.
The stablecoin is intended to achieve the democratization of financing, where all users have equal conditions to opt for special funding, guaranteeing that the fees per operation are much lower.
- As Payment Method
It could be considered one of the most anticipated uses of cryptocurrencies by users; consequently, it would facilitate paying for the purchase or sale of goods and services.
The conversion of said digital currencies would be easier for the parties since Fiat currencies back them.
It is important to remember that these are just some suggested uses for stablecoins.
One of the main characteristics of cryptocurrencies is that they are decentralized and stablecoins, even though they are digital currencies, are intervened by traditional financial entities.
Conclusion
Stablecoins offer a safe option of cryptocurrencies; that is why in the traditional financial market, its possible adoption is evaluated even as a payment method, transparent and fast at the time of its conversion, thus achieving more people get involved with the cryptocurrency market but from the traditional market.
