What Are the Advantages of Stablecoins?
Stablecoins are versatile and powerful tools for investors, traders, and cryptocurrency users. Their main strengths include the following:
1. Stablecoins can be used for day-to-day payments. Businesses, and individuals value stability. Due to its volatility, cryptocurrencies haven’t achieved widespread use for day-to-day payments. Large stablecoins have a track record for maintaining their peg, making them suitable for daily use.
2. Stablecoins have the benefits of being blockchain-based. You can send a stablecoin to anyone globally who has a compatible crypto wallet (which can be created for free in seconds). Double-spending and false transactions are also almost impossible to run into. These qualities make stablecoins incredibly versatile.
3. Stablecoins can be used by traders and investors to hedge their portfolios. Allocating a certain percentage of a portfolio to stablecoins is an effective way to reduce overall risk. Your portfolio as a whole will be more resistant to market price swings, and you will also have funds on hand in case a good opportunity comes up. You can also sell crypto for stablecoins during a market downturn and repurchase them at a lower price (i.e., shorting). Stablecoins allow you to enter and exit positions conveniently, without the need to take money off-chain.
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