Time and again you must have across terms like cryptocurrency and crypto tokens etc.
But have you ever wondered what this is all about? Cryptocurrency entered the investment market in 2009. Bitcoin was initially targeted to become a digital payment system. Cryptocurrencies enable easier digital payments through the web. The primary purpose of the crypto token is to enable peer transactions. It means you can easily transfer tokens from your account to another account. All these transactions are undertaken on the internet. Both sender and recipient need a digital wallet to complete user transactions like bit-qt.app.
How do cryptos gain popularity?
Crypto became an instant hit amongst investors in 2009 through Bitcoin. Along with the growing popularity of Bitcoin, many other crypto tokens made entry. Today, there are more than 15k+ crypto tokens in the global market. The market volume of crypto tokens has increased by more than $3 trillion. Along with cryptos, there are other tokens including stablecoins, non-fungible tokens, etc.
Understanding stablecoins?
Stablecoins is a type of cryptocurrency that is often pegged to any other currency. in certain cases, stablecoins can also be linked to a commodity or even other asset bonds. Most stablecoins are pegged to US dollars. Such type of tokens allows you to eliminate the risk of market fluctuations.
Cryptocurrencies are not bound by any regulation. This is one of the reasons for huge price fluctuations in cryptos. Additionally, none of these cryptos have backing from any regulatory agencies.
Stablecoins is a type of cryptocurrency that is backed with a currency value. The price of stable tokens changes only when the value of currency changes.
Based on the design stablecoins may be classified into three types –
Fiat collateral
This is the simplest form of stablecoin. This system works like other traditional tokens. An investor buys a token for $1. The most popular stable tokens include Tether, USDC, etc.
Crypto collateral stablecoins
Yes, this is the second type of stablecoin. In this case, a stablecoin is pegged to another crypto token. Say, for example, you can deposit a portion of your Ethereum token to buy another set of stablecoins. It means if the price of Ethereum falls in the global market, there is a high probability of a fall in stable coin price. And the same logic works and vice versa as well. If the price of the token increases, then the same applies to stablecoins as well.
Non-collateralize tokens
This is a different type of collateral stablecoins. In such types of tokens, there is no backing of any collateral for stable tokens. It operates the same way as traditional currencies.
Is it worth investing in stablecoins?
Yes, time and again there has been debate about investments in stablecoins. If you are new to the crypto investment market then it is best to consider stablecoins. As a new investor, it will allow you to better understand blockchain technology. You will also gain a better understanding of the market fluctuations on the go. Additionally, crypto tokens also enter the bearish market often. Investing in stablecoins gives you the benefit of eliminating such market recession.
But, if you have been a long-term investor in the market, then stablecoins is not your pick. Regular traders and investors stay away from stablecoins.
Advantages of investing in stablecoins
In a nutshell, there are various advantages of investing in stablecoins. While you are protected from market fluctuation, let us look at other benefits.
Stablecoins allow secured transactions with low transaction fees. These type of currencies are stable and allows for easier adoption.
In the current situation, stablecoin seems to be a safe bet for your investment. Blockchain technology can also reshape the financial market condition. There are large-scale investments in this technology.
Also, considering the growing interest in cryptos there are regulations undertaken. Many countries are coming up with regulations to protect investor interests. Stablecoins need to go through various regulations before getting listed. Also, not all stablecoins are listed on all exchanges.
In the current market condition, it is better to keep a watch on various cryptos and stable tokens. Terra, the most popular stablecoin completely wiped out from the entire market. The market crash has been giving tough times to many investors. Hence, it is recommended to make your investments slow.
Disclaimer: This is sponsored marketing content. The presented material by no means represents any financial advice or promotion. Be sure to do your own research and acknowledge the possible risks before using the service of any cryptocurrency platform.
