Future of Stablecoins, amidst Crypto conundrum!

Stablecoins are cryptocurrencies without volatility. Their functionalities are a lot similar to that of a cryptocurrency, but their value is steady, more like a traditional currency. It maximizes your chances of protection from extreme volatility. Any instrument to be used for the transaction should hold some fundamental value, commodities such as oil(is used as fossil fuel), steel(is used in construction industries) or precious metals like gold, possess that fundamental value.

The collateralized stablecoin, which means their value is attached to some asset like US dollar, provides them greater legitimacy, hence security. Some stablecoins also employ algorithms to manage the supply and demand of the coin, so what is in circulation, matches what is held in reserve. Tether, USD coin, Binance USD, Dai, TerraUSD, TrueUSD, Pax Dollar, Neutrino USD are some of the examples of trending stablecoins.
Why stablecoin could be a preference over cryptocurrency and can remain in vogue. Cryptocurrency or stablecoin both skips the longer institutional processing lags, corruption, inflation, and taxation regime, yup, till they are free from stronger government regulations. But unlike cryptocurrency, stablecoins provides an adobe to an investor which includes the last person in the line, who might not qualify for the finances from legitimate financial institutions to invest, in less likely to be a fluctuating space.

But, still, there is a catch, the government holds the monopoly over issuing the money, there, it holds the power, anything challenging the authority of the government to print and spend, will be brought down quietly. This monopoly allows governments to indirectly tax citizens by increasing the supply of currencies, thus devaluing it. We have already seen, the action taken by the authorities in China, by completely banning cryptocurrencies. Moreover, they plan to issue their own central bank-issued digital currency.

Overall, alternatives to fiat currencies offer people greater choice as per their convenience and needs. Free market competition is healthy in nature, we are yet to see its results when this competition is in money. Digital currencies have a long way to go, it's difficult to conclude what future it holds. But certainly, it has created for itself a rather larger space for now.

Your job as a smart investor is to separate the facts and the news, from the fiction and the noise. — Chamath Palihapitiya
Invest what you can afford to lose.

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