When talking about cryptocurrencies, the ones that don’t always get the limelight are stablecoins. As such, many people don’t know of their full potential and why trading them could turn out to be much more productive than investing in other, more volatile cryptocurrencies.

In this article, I am going to talk about the most essential of such aspects that make stablecoins so valuable:

Low Volatility and Safer Investment:

Since stablecoins are backed by a fiat currency, such as the US Dollar, or a commodity, such as gold, etc., their value is much more stable compared to other more volatile cryptocurrencies, like bitcoin.

This means that if you invest in stablecoins, you need not worry about drastic overnight fluctuations in its value or to see it crash suddenly. You would essentially have a crypto space version of whichever fiat currency the stablecoin is backed with, making your money much more liquid than it would be in paper form.

Daily Volume:

Even though the market cap of stablecoins is less than that of the volatile cryptocurrencies, stablecoins are more dominant in terms of volume being exchanged.

If we take tether, for example, its volume exchanged per day ($65.3 b) is more than that of bitcoin ($37.6 b) and ethereum ($24.8 b) combined, the two largest coins and founding pillars of the crypto world. This means that people are not just buying and holding it, but it is actually being used as a utility and trade currency.

Utility:

Active traders find themselves less limited being able to trade between crypto and stablecoins, that way, not having to convert back to fiat currency, making it a simple free flowing process.

Also, staking for interest is huge as there are several top tier platforms that offer between 5% and 12% annualized for staking stablecoins, it would be near impossible to find these returns with traditional financial firms. Not to mention liquidity pools (one side being a stable asset - USDT/USDC/DAI) where the yields can be many multiples of this.

Stablecoins make it easier for you to generate a passive income without having to abide by the rules and regulations set by banks. They also hold more trade value compared to volatile cryptocurrencies.

By far the biggest stablecoin utility is for digital payments, as follows.

Secure and Efficient Digital Payments:

Since stablecoins operate from decentralised, public blockchain networks, they ensure transparency to all users and suppress the risk of cyberattacks.

The transactions are also very quick and efficient since no central authorities are regulating them.

They also don’t suffer from sudden fluctuations, as is the case with volatile cryptocurrencies. As such, the involved parties need not worry about the value of a transaction decreasing by the time it reaches the other end or is cashed out.

This characteristic gives stablecoins a lot of leverage over volatile cryptocurrencies. It is also the reason why most companies that do accept digital currencies accept only stablecoins or have the digital currency converted to stablecoin as soon as the transaction is complete.

There is no surprise facebook is looking into launching its own stable coin (Diem) in Q1 2022, and when this happens, 3 billion facebook users will have access to stablecoin facilities overnight.

There is a risk that one of the large stablecoins could “lose it’s peg” and not be worth $1 in the future, although even with lots of FUD in the space, this has never happened to any of the major stablecoins          

Digital Asset Management Ltd ‘DAM’

At DAM we facilitate large scale B2B crypto payments using stablecoins.

We have processed over 200 million euros in Q1 and target 1 billion for the next 12 months. Also, providing a fiat on/off ramp to GBP, EUR and USD every single day against all the major crypto stable assets.

We already work with some of the largest gaming companies and payment gateways in the world. Don’t miss out on the opportunity to move your money cheaper, faster and safer than with traditional banking.

If you wish to learn more about stable coins or have any other crypto questions that DAM might be able to help with, please feel free to PM me


Louie Summers