The world of cryptocurrency can be confusing because there are so many changes. Prices fluctuate, laws change, and storefronts constantly open and close. For many people who want to start buying and selling cryptocurrency, learning the changes that the currency goes through is the hardest part.
However, some cryptocurrencies are actively designed to be stable and backed by something physical. These stablecoins are backed up by things like real currency, where you get a flat exchange rate that isn’t meant to change. But even regular cryptocurrency is starting to become stable through various features. Let’s explore some of these and why they are so important to the future of the currency.
There are plenty of online video games that are powered by cryptocurrency. They’re easy for people to start playing, especially those who have crypto wallets already set up. These games can take advantage of Blockchain’s security benefits. That means everyone who plays and wins gets paid fairly and promptly.
Having both the stability and security of Blockchain as well as stablecoins can increase the stability of a game. For example, if people want to purchase NFTs, cosmetics, or other items from an in-game shop, they can do so without fear of the prices changing every single day. Instead, the price of all the items is stable due to what stablecoins are backed by.
Another aspect is the gambling industry, which is empowered by the integration of crypto technologies, creating new formats of games, as well as payment options. Today, Bitcoin games in online casino platforms are in demand thanks to several factors, and many of them are related to the nature of crypto, such as instant transfers, secure transactions, no third-party fees, and so on.
Another industry making wide use of the stablecoins cryptocurrency is crypto-asset trading. It is the digital representation of value that people are trading day to day for. These assets are packets of data that can be bought, sold, and stored. However, in order to prevent a massive swing in the market, many of these assets are stablecoins. They need to be backed by something valuable to be traded. Plus, the people who trade need to know what that value is.
For example, the stablecoin Tether has become one of the biggest assets in crypto-asset trading. It is involved in half of the trades of Bitcoin and Ether, and in 2021 it surpassed the trading of unbacked crypto-assets. Whether you are trading NFTs or other packets of data, you need to use stablecoins in order to make sure you know what you are getting.
The decentralized finance (DeFi) space is using stablecoins to lend out money for better rates when compared to traditional savings accounts. Plus, many people are using stablecoins for loans. While they aren’t backed by any government insurance, they do allow people to earn higher yields on those products.
Smart contracts are another tool that can benefit from stablecoins. The smart contract is drawn up between two people, and all of the terms and actions will be automatically executed. After that, the contract is public and irreversible. This allows for everyone to make anonymous contracts with one another, and for those contracts to automatically be enforced.
DeFi is one of the best places for stablecoins to be used because they are very easy for people to trade in decentralized exchanges.
Whether you are trying to send money to a relative or you want to make some international payments, cross-border transactions can be extremely difficult even at the best of times. But with stablecoins, it is much easier to pay cross-border salaries. Rather than dealing with the various fees and exchange rates prevalent in cross-border transactions, you simply need to pay the transaction fee.
Then the funds are moved across the blockchain and it goes by pretty fast when compared to the traditional financial system. While they can be impacted by the type of network being used, the complexity of the payment, and the amount paid, it will still be shorter than making a transaction with the traditional system.
The volatility is much lower than with traditional cryptocurrencies, which also allows for it to be backed up by traditional assets. It has a monetary policy and it works a lot like traditional currencies, and they are controlled by a central entity.
While you do lose out on the high volatility and decentralization of traditional cryptocurrencies, stablecoins have several advantages that allow them to be used in various industries. They are backed by valuable items that will continue to have the same value no matter what. Whether that is a government entity, the gold standard, or another cryptocurrency, the value doesn’t change.
Having features and industries that benefit from stablecoins will make the transition to a crypto-based economy much easier. Then people can focus on interacting with the new economy, without having to worry about constantly changing prices. That makes the process of buying and selling much easier, which means more of it will happen.
Cryptocurrencies moved many business financial actions to the online world, and while it’s quite beneficial, it’s always important to gain a good knowledge about online financial deals, then only get into it. This will save a lot of time and will ensure a more strategic approach for the company in terms of managing the finances.