When it comes to cryptocurrency, the first name that comes to mind is “Bitcoin” but we also know that stablecoins are playing a more vital role in the crypto sphere.
What are stablecoins?
In contrast to Bitcoin and other prominent wild volatility cryptocurrencies, stablecoins are blockchain-based and secure cryptocurrencies.
Most existing stablecoins use the dollar as their benchmark asset, but several are also linked to other government-owned fiat currencies such as the euro and the yen.
As a consequence, unlike high-figure cryptocurrencies such as Bitcoin and Etherum which may suddenly rise and fall, the price of stable coins changes relatively little.
Tether Was the first stablecoin, launched in 2014, which was followed by several additional stablecoins. For every dollar they deposit, users earn a token. Tokens can be exchanged at any moment, even at one-per-one conversion rates, into the original currency.
Types Of Stable Coins
- Fiat Backed Stablecoin
- Crypto-Backed Stablecoin
Fiat Backed Stablecoins
Stablecoin backed by fiat money remains steady as if the coin is purchased for less than $1, it is possible to go and exchange for $1, or vice versa, with the emitter. The only difficulty is that the issuer relies on properly controlled and honorable deposits and withdrawals.
Coins:
- Tether — USDT
- TrustToken
- TUSD Gemini
- GUSD Paxos
Crypto-Backed Stablecoin
Stablecoins backed by other cryptocurrencies use (e.g. ETH). The crypto value itself isn’t stable, these Stablecoins need to use a series of protocols to make sure the price of the issued stablecoin is $1.
Coins:
- MakerDAO
- Havven
Why is Stablecoin Important?
Stablecoins were largely used to acquire other cryptocurrencies such as bitcoin, as a result of the absence of access to traditional banking for many cryptocurrency exchanges.
Stablecoins are also valuable in their ability to operate with so-called smart blockchains, which do not require legal authorization, unlike traditional agreements.
The reason why stablecoins are more preferable to any other fiat currency is that they can be programmed in such a way. That software code automatically determines the conditions of the contract and how the money is distributed and when it will be distributed.
Apart from that stablecoin is and will play a really important role in terms of payments, business who are willing or thinking to accept payment in cryptocurrencies but fear the volatility of the major crypto can start accepting payment in stablecoins like Dogecoin, Tether, and so on.
It will certainly happen, but the more people are involved in this digital money, the more trustworthy it is and the more trustworthy it will be.
For this reason, even in crashes and economic downturns, banks and regulators will sustain a system.
Why And How To Accept Stablecoins As Payment?
The acceptance of stable coin payments on your website allows you to take advantage of their popularity and meet current and future consumers’ needs.
By providing a payment solution that is not available to your rivals and that is trustworthy to your clients, you may ensure your development.
To start accepting stablecoin you either use a cryptocurrency payment gateway like coinremitter, coinpayments, and so on.
Benefits Of Accepting Stablecoins
- Low fees
- Secure transactions
- Less Volatile
- Fiat Backed
Conclusion
While many Stablecoins look safe to endure, the harm to cryptocurrencies must also be taken into account.
The huge considerable movement of the price of major cryptocurrencies can significantly affect the market, so using stablecoins can secure you from that damage.
