How Stablecoins Are Redefining Cryptocurrencies?

Today, cryptocurrencies are synonymous with price fluctuations. This makes them a poor store of value and many view them as alternatives to the stock market. However, this perception is quickly changing with the introduction of Stablecoins.

What is Stablecoin?

A stablecoin is a cryptocurrency that is pegged against real-world assets such as bullion or fiat currency or managed by computer algorithms. This gives the coin a “stable” price while also enabling them to harness the underlying benefits of cryptocurrencies.

How does it work?

Broadly speaking, there are two types of stablecoins - 1) algorithmic and 2) reserve-backed.

Algorithmic: Here, the coin uses a programmed script to manage the supply-demand of the coin and in turn, stabilize its price. For instance, when the demand for the coin rises, the script will increase the supply by minting new coins to secure the price. Likewise, when the demand falls, the script will automatically cut the supply to ensure that the coin’s price does not erode.
Reserve-backed: As the name suggests, this type of stablecoins are pledged against real-world assets such as gold, fiat currency, and even other cryptocurrencies!

What are the advantages of Stablecoins?


Apart from promising a steady exchange rate, stablecoins have other benefits:


  • Users can access to a currency that is mobile, immutable and secure.
  • One can execute anonymous transactions in a fraction of a second and at very low fees.
  • Unlike cryptocurrencies, stablecoins do not lose value in a volatile manner, thus making them a very good store of value.

With the presence of several cryptocurrency development firms, building a stablecoin todayhttps://www.blockchainappfactory.com/stable-coin-development#utm_source=Blogger&utm_medium=Blog&utm_campaign=vignesh is not a hassle anymore. Blockchain App Factory is a top company that offers end-to-end solutions that are white label and highly customizable. They have years of experience in cryptocurrency and blockchain development and house a phenomenal team that can help you launch your projects in no time.

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