One of the fundamental problems with cryptocurrencies, which is keeping masses from adopting them is the turbulence or fluctuation in their prices. The value of digital coins keeps on changing, which makes them less attractive avenue for investment – after all, people are not sure whether they will be able to realize the full value of their investment in digital currencies as prices keep on oscillating. It is indeed a legitimate concern for any earnest investor.
What Is Stablecoin?
In the backdrop of this uncertainty, the crypto industry is witnessing the rise of stablecoins – a kind of cryptocurrency whose value is pegged to fiat currency, thereby making it immune to market fluctuations. This stability is much appreciated among the masses as the stablecoins help them to remain assured of the value of their digital coin and use them for their routine transactions. On a broader scale, stablecoins can be pegged to a cryptocurrency, a fiat currency, or even to other commodities that are usually traded on the exchanges like gold and other metals. However, pegging the stable coin to a fiat currency such as Dollar or pound is the most reliable and convenient practice.
There are two primary reasons for the popularity of stablecoins across the globe. First, these provide the convenience and high transactional security of cryptocurrencies and second, these offer the stability that can easily match with any other fiat currency out in the world. Therefore, the owners of the stablecoin need not worry about the price fluctuations while enjoying the decentralized and high safety credentials associated with their crypto transactions.
How Booming Is the Stablecoins Industry?
Recognizing the high interest of organizations throughout the world, including the government and regulatory agencies, the segment of stablecoins is getting heightened attention from several key players in the cryptocurrency and blockchain industry. Take, for instance, the focused strategy adopted by Circle Company, which last year sold its over-the-counter desk to Kraken exchange to solely focus on stablecoins business. In addition, Circle has made some significant changes in its organizational structure while realigning the departments to shift gears and emphasize on the furthering of stablecoins’ business. Just so you know, Circle is one of the most prominent names in the stablecoins category of the industry.
Who Are Backing Stablecoins?
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The credentials of stablecoins have also been patted by many known personalities and prominent among them is the name of John McAfee, who is an avid crypto supporter. John, the founder of the McAfee antivirus, is one of the staunch propagators of cryptocurrencies and has openly supported the concept of stablecoins time and again. McAfee also lauded stablecoins for their conversion capability, which allows people to convert one form of currency to another without losing their value.
How is Facebook Making Stablecoins Popular?
Another important development that has boosted the prospects of the stablecoins is the Libra project of Facebook that is currently being under the commercialization phase. The social-media giant is working very ardently on Libra cryptocurrency, which is essentially a stablecoin as its value will be pegged to a Fiat currency.
In order to promote its usage, Facebook has collaborated with several other key players in the financial technology domain. Given many Facebook users, the business potential associated with the Libra project can be safely assumed as humongous. This explains why many companies are eager to join hands with Facebook.
That said, many countries and regulatory agencies have also expressed their concerns on the Libra project. Some of the detractors are worried that the success of the project probably will make Facebook too powerful to control while other critics argue that the matters related to currency must remain within the domain of governments and policymakers. While some of the concerns expressed by the doubters are relevant and required serious deliberations, the overly cautious approach with a closed mindset towards the adoption of digital coins might not prove very conducive for the crypto industry.
What Lies in The Future for Stablecoins?
Given the high intensity of turbulence that cryptocurrencies continue to face, the future of stablecoins is filled with enormous business and expansion opportunities. Not only companies like Facebook are coming up with stablecoins, many governments and central banks are also planning digital currency which will be working along similar lines as stablecoins. Undoubtedly, the stablecoins are the next big thing in the cryptocurrency domain and have the power to deliver efficiently on the promises of safety, security, reliability, and more importantly, stability in the cryptocurrency domain.
Conclusion
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Stablecoins presents a reliable way to adopt cryptocurrency as the concept ensures that the stability of the digital asset remains intact. It is an attractive alternative to all the people who want to use the cryptocurrency but somewhere deterred by the constant fluctuations in the value of digital coins. The stablecoins promise a bright future for cryptocurrencies as it is helping to bridge the gap between digital coins and their mass adoption. Irrespective of the reason why one decides to switch to cryptocurrency, stablecoins is the most feasible and reliable option to start with.
