![]() In fact, you’ll notice that the value of popular stablecoins is equal to USD 1 or close. Fiat currencies like the USD or Turkish Lira.The different types of collateral that stablecoins are pegged to include: These features allow stablecoins to avoid the unpredictability and volatility associated with other cryptocurrencies. It also means unlike other cryptocurrencies this is backed by an asset that has more than just perceived value. This acts as collateral and if an investor sells stablecoins, its equivalent is taken out of the reserve. For example, a stablecoin tied to USD with 5,000,000 coins in circulation will have the equivalent in cash in holding at a bank. Stablecoins are also known to maintain a reserve of the asset they’re pegged to. The most popular stablecoins are tied to fiat currencies like the US Dollar, precious metals like gold, or at times even to other cryptocurrencies. Stablecoins are cryptocurrencies that are pegged or tied to a stable external asset. ![]() There are also cryptocurrencies whose value rarely fluctuates and they are known for their stability compared to others like Bitcoin, Ethereum, and more. That said, there are a few aspects of cryptocurrency like the relatively high volatility and unpredictability that can elicit a cautious and measured response amongst existing and potential investors alike. In addition, many cryptocurrencies also have powerful utility functions such as smart contracts, cross-platform interoperability and lightning-fast transaction speeds. Cryptocurrencies have become popular among the general masses because they can be traded for potentially lucrative returns. Cryptocurrency is an umbrella term used to describe digital currencies that are built on the blockchain.
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