Stablecoins have been one of the most talked about currencies among newbies and experts in the cryptocurrency market.

For beginners, it isn’t much of a confusing concept, but it’s still something one should learn the basics of.

In this video, we’ll tackle Stablecoins, the type of stablecoins, how they operate, their pros and cons, and what experienced crypto enthusiasts think about them.

What Are Stablecoins?

To explain the concept of Stablecoins simply, they can be likened to the U.S. Dollar or Gold. As the name suggests, these coins are stable and have a way of making sure that their values don’t drop extremely in a short span of time—unlike most cryptocurrencies which are characterized by their volatility.

Stablecoins have three common types. The Fiat-Collateralized such as The USD or Pound, Crypto-Collateralized such as the UST and DAI pegged to the U.S. Dollar, and the Algorithmic Stablecoins, such as DJED are all stablecoins with slight distinctions from each other.

How does Stablcoins Work?

Stablecoins, despite varying differences, all operate under one general idea: Their main selling point is being stable. They peg their value to external references, usually fiat currencies such as the U.S. Dollar.

To control their supply, regulations are more algorithmic and tend to sacrifice some level of growth in value in exchange for stability.

Pros and Cons

Stablecoins seem appealing because they’re the best way to keep your cryptocurrencies on hold without the risk of them dropping in value overnight and without taking them out of the crypto market. They can be ways to put your money on hold if you’re too busy to trade without fears of losing out a lot.

However, because they’re the least volatile cryptocurrencies, you’re also unlikely to make a profit from them. Only 1-2% increases and decreases are expected, so they’re more like a cryptocurrency bank than a way to earn.

What Do Enthusiasts Think of Them?

Enthusiasts who have been in the game for a long time believe that they’re definitely important for the market. As mentioned, they’re a way to protect your assets if you aren’t actively trading but are also unwilling to take them out.

However, not all Stablecoins are the same, and the distinctions between them are things you’ll have to learn from experts and day traders who make a living off of them.

What do you think of Stablecoins? Will you consider using them shortly? Are there any you can suggest to fellow crypto heads? Feel free to comment down below.

These videos are for educational and entertainment purposes only – THIS IS NOT FINANCIAL ADVICE!


Author: Carol