The stablecoins are increasingly taking the place of bitcoin due to their price stability. Cryptocurrencies keep fluctuating, and those who use them to pay for goods or services receive feel at risk. An example is in the year 2021 April, the price of bitcoin went so high, and its value was lost; however, it was retrieved back.
For this kind of change instability, the Stablecoins and the digital currencies issued by the bank are almost taking over. However, they alter the crypto market because they exist without being backed by assets and no regulation. The momentum of the stablecoins is high because of their price stability. The stablecoins are less volatile compared to other cryptocurrencies. Specifically, the coins are designed to stabilize prices and are pegged on an existing asset. Tether is known to be the most popular stablecoin despite its legal problems. Other stablecoins include the DAI, and Binance USD True UST, among others. When a person needs to retain the value of their capital, they choose to use stablecoins because the price is stable.
Cryptocurrencies are the investors’ dream, but it comes with a risk that one should not invest in them for more than one can lose. Any investor’s wish while investing in a particular market is always to make a profit and not incur losses. With crypto being volatile, investors should limit the amount they invest in the digital currency market. If they do, it ensures they’re not depressed when the price is low for them to sell what they purchased at a high price.
For this reason, to retain the value of your capital, it is good to choose to use stablecoins. With the volatility in crypto assets, the banks are moving towards providing their digital currencies, which are safer and more resilient than private digital currencies. They aim to have regulated digital currencies and those whose transactions are monitored by the bank because, for this reason, the currencies are taken to be safe other than running currencies that are not tied to any regulatory arm. Every bank is looking at how CBDCs will impact the economy with the hope that they will positively impact it. The digital currencies issued by the bank alter the crypto ecosystem because they do not lie under DeFi. However, the stablecoins and CBDCs are thought to alter the crypto ecosystem by being backed-up government-controlled assets. If the stablecoin can grow effectively, it can be the problem solver to the issues of volatility facing digital currencies. The hike and drop in prices in digital assets are due to no regulation, and if only the digital currencies could lie under regulation and the selling and buying prices were set. The virtual currencies could be stable like the stablecoins. The digital assets should be monitored so they’re stable and the investors feel safe trading in the market.
