Stablecoins are a new type of cryptocurrency, which are gaining popularity because of their assurance to lessen price volatility. Stablecoins have constrained the use of Bitcoin and the numerous cryptocurrencies as a medium of exchange.
Tether launched the first stablecoin called USDT in 2014. It was followed by an array of others designed to offer stable value. Stablecoins are useful because they store value and are used as a medium of exchange.
Price stability is important for storing value and use as a medium of exchange. Policymakers focus on keeping rates of fiat currencies widely stable. A 2% move in fiat currencies [Fx trading] within a single day initiates a landslide. On the other hand, in the cryptocurrency world, it is normal to see cryptocurrencies escalate and collapse by 10% within a day. Such extreme swings cannot be defined as a stable currency. So, a new breed called stablecoins was issued to offer price stability needed to inspire wide use.
How can crypto trade games be changed using USDC stablecoins?
In 2018, the USDC stablecoin was created and is supported by the US dollar. Its price stays fixed at $1. The Centre Consortium regulates the coins. It administers the financial and technical standards for USD Coin to ensure transparency around 1:1 support. It means for every USD Coin created there is $1 held in reserve [in US dollar form or other cash equivalents].
Therefore, when crypto investors buy 1 USDC then its redeemable value is equal to 1 dollar. The main reason to own USDC is to store it on a reliable crypto exchange or in a USDC wallet on ZenGo X platform. You can then use it to fund your trading transactions or buy other cryptocurrencies.
USD Coins offer transparency
USDC is playing safe right from the start to build trust. Every month Circle releases audit reports about their reserves [by Grant Thornton LLP, an accounting firm]. They are even assured to own the US Dollar, and short-term treasury bills as well as apply for a national charter for launching their digital bank.
USDC is monitored and controlled by banking regulators under similar laws that monitor the balance held on PayPal or with Square or Apple. Since the launch of USDC, those statutes have been applied and it is continued. It helps to create trust and confidence in the electronic payment systems, which is essential.
The advantage of USDC is that it facilitates people to sell or buy other cryptocurrencies from the exchange without the need to use fiat currencies. USDC transfers happen round the clock and within seconds even across the borders. The transaction cost is lower than traditional payment methods.
Unlike Dogecoin, there is no possibility of price appreciation associated with USDC investment. So, before investing understand the regulatory setting surrounding cryptocurrencies and stablecoins. However, stablecoins price is more stable, so performing economic exchanges is easy. Some investors look to earn profits from quick price movements.
Nevertheless, traders who don’t speculate prefer to invest in an asset with a stable price. Volatility is an unwanted risk, especially in the crypto economy space because pricing goods or creating protocols is hard. Alternatively, stablecoins can change the crypto trade game.