What Are Stablecoins and Their Types • Stablecoin is a type of cryptocurrency which is equipped to maintain a stable market price. It is resistant to market volatility. • Stablecoin maintains a fixed value proportional to an underlying asset. • Centralized stablecoins (backed by US dollars or gold), and Crypto-collateralized stablecoins (backed by Bitcoin or Ethereum) are the ways to create it. • Another type is Non-collateralized stablecoins that rely on smart contracts.
The Different Kinds of Stablecoins • Asset-backed stablecoins derive their value from an asset’s worth. A popular example would be Tether. • Algorithm-based stablecoins work based on the equation between demand and supply. A relevant example would be Basis. • Algorithm stablecoins balance expectations of bond-holders and shareholders. • Generally, stablecoins are pegged at a 1:1 ratio to assets
Advantages of Stablecoins • Minimum fluctuations ensure price stability and no risk of loss as they are not affected by market conditions and inflation. • Businesses save transaction fees which would have been paid to intermediaries like banks and payment processors. • It operates 24x7 unlike financial institutions which have limited working hours. • Can be used for lending at double-digit interest rates to debt investors which is higher than savings instruments.
Importance of Stablecoins • Help in banking the unbanked as only the internet is needed. • Faster and cheaper cross-border payments which help migrant workers and businesses firms to reduce remittance expenses. • It serves as a store of value during a market downturn and can be used to purchase items or exchange with other cryptocurrencies. • Can create a decentralized economy as it can be used as collateral for term loans.
Why Stablecoins Are Better Than Bitcoins • It automatically stabilizes in case of overvaluation or undervaluation. • Low volatility increases an investor’s confidence and lifts trading volume. • Highly accepted among regulatory authorities. • Can be used to park money while trading by using it as a base currency. Transfer of funds can be done to bank accounts using stablecoins.
How to Create a Stablecoin • Formation of a suitable crypto token • Connecting them to a smart contract • Deploy tokens on the blockchainplatform • Promote them to investors
CONTACT USWebsite : https://www.blockchainappfactory.com/stable-coin-developmentEmail Id : firstname.lastname@example.orgContact No : +91 6382 665 366