Information about Stable Coins and how they work

In this contemporary world who doesn’t hear about cryptocurrency? Well, the question is what have you heard about it? If you have heard about it that it might be mentioned that it is a fraud and a fake currency where people are duped off their money in the name of gains it is clear that cryptocurrency is still something the common mass has not understood well. To be true, it is a currency system with a vast platform and the potential to cut the centralized currency system of government.

Moreover, half of the cryptocurrency taken is owned by the master coin, bitcoin. The founder of bitcoin, Mr Satoshi Nakamoto, developed this currency in the name of decentralized currency, which would not require any government system to maintain its record, and its transaction would be accessible to all. If you are interested in Bitcoin trading, you may also consider Perfect Hedge and Inflation in Bitcoin.

In the light of bitcoin, various other coins have developed that have been backed by similar technologies, especially fiat currencies and commodities. These coins are known as stablecoins. There are many stablecoins, but the most famous one is Ethereum. 

The founder of Ethereum claims that this currency has much more potential than bitcoin due to its proof-of-stake mechanism of working. Therefore, Ethereum is considered environmentally friendly and more practical than bitcoin. Moreover, many researchers have found that bitcoin mining is very energy consuming and generates a heavy carbon footprint, therefore, if this technology continues, bitcoin mining might be banned entirely, and it is banned in many countries. Anyways, there are some details about stablecoins that might help you to know more about them.

The evolution of bitcoin and stablecoins:

The story of bitcoin unfolds around 2009, the founder of bitcoin, Mr Satoshi Nakamoto, developed a currency that runs on computer-encrypted data and nodes. The most advanced feature of bitcoin is that its coding runs on some 1200 computers across the world, and the strength of the codes is so muscular that many strong hackers have still not been able to hack it after so many failed attempts. 

The world of cryptocurrency is very volatile. If it can give a 150% return on investment in profit, then the value can fall 300% in a single night, especially for altcoins. 

But, stablecoins do not fluctuate as such. So, they are used for swapping altcoins on exchange mediums. E.g., USDT is used for buying Matic, dogecoin, on-balance, and other apps that do not run in the native currency. Stablecoins, are coins backed by US dollars. The prices of these coins fluctuate as per the fluctuation in the US dollar price. Therefore, they are considered safe in comparison to altcoins and bitcoin. 

How can you use stablecoins?

  • Hedging:

The primary use of a stablecoin is at the time of the bear market when prices are down streaming, and the entire market is red. Then, your money can be put in stable coin as a form of hedging; the value of these coins do not fall as much as the altcoins, instead, some coins, such as USDC and USDT, is used for swapping with other coins, and their value rise, as when altcoins are sold, the stablecoins are bought.

  • Earn interest:

When you think of a long-term investment in cryptocurrency and do not want to risk market volatility when you can use stablecoins, where money is safer than other cryptocurrencies.

  • Send money internationally:

As we know, stablecoins are used on international exchanges to buy altcoins. They can also be used to send money to any wallet worldwide without any territorial guidelines. It is the fastest, cheapest, and easiest way of money transfer in the form of a stablecoin that can be encashed in any currency once withdrawn from a cold or hot wallet.

Some other types of stablecoin in crypto:

  • Fiat currency:

Fiat currency is considered one of the most dependable currencies as the value of gold backs them, and their values are not as volatile as the digital ones; moreover, these currencies are also government-regulated.

  • Precious metals:

Gold and silver are the two precious metals that are used as a store of value for money and as stable currencies in physical exchange mediums.


The world of stablecoins has grown dramatically over the years, similar to the market of gold and the dollar. The reason is that it has the transparency of cryptocurrency and the ease of use and dependability on the US dollar, which makes it reliable. Learn more about many insider stories of stablecoins and related articles with us. 

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