Stablecoins and why they are so underestimated

News / 13.08.2020

It may be a very surprising and radical fact, but stablecoins are some of the most underestimated assets in the 21st century. The resentment that most people feel towards the volatility of cryptocurrencies is usually quite justified from the massive price jumps with seemingly no explanation at all.

Most people just want to use cryptocurrencies for fast and secure transactions, but the feeling of not having enough for a service or a product the next day you wake up is a very serious issue for most. This is where stablecoins shine the most. They have almost every single feature of cryptocurrencies like Bitcoin, Ethereum, and others, with just one small exception that they don’t jump in prices at all.

Stablecoins are always worth the initial price that was put on them by its developers. Usually, it’s 1 USD, but there have been cases where 2 USD or 5 USD coins had been released as well.

Let’s discuss why stablecoins would be the perfect method for further crypto adoption.

Reliability

One of the primary features of stablecoins is that they are very reliable. A business owner can safely sleep at night knowing that the month’s batch of goods he or she just sold will be worth exactly as much as it did the moment he or she sold them at.

This is not a luxury that BTC and altcoins can provide, unfortunately. Many eCommerce stores have seen their revenue shrink to less than 50% of what they hoped for after they had already sold their products.

Due to this unreliability and a general problem with cryptocurrencies, many online platforms simply got rid of the option completely or minimized to only a few products.

Here’s where stablecoins come in.

The Goal

The goal of every store when adding crypto options is to provide fast and secure transactions for their customers, but it is most definitely not worth it if it costs them 50% of their monthly revenue.

Therefore, it is only natural that they just remove the volatile cryptos and add the ones that have integrity and good liquidity. Currently, only the USDT falls under that category, however other coins are catching up as well.

Calculating returns

The customers have these issues as well. Imagine you bought something for 1 BTC today which is worth $10,000 and next week you find out BTC just increased to $15,000. It would have been a lot smarter to just wait, cash out the BTC and spend the $10,000 on its own on something and keep the $5,000, right?

Well, that’s one issue that the iGaming industry started to face the moment they incorporated cryptocurrencies.

This was especially the case with live blackjack games for money due to its popularity. People would enter the platform with cryptocurrencies as deposits, convert them into USD and then play based on them. However, when withdrawing the funds, they had to indicate cryptocurrencies as well. Unfortunately though, after weeks of having these funds on the platform, prices would change and sometimes people would walk away with a loss when they had actually won most of their games.

This eventually forced iGaming companies to adopt stablecoins or any other means that would ensure that their clients walked away exactly how much they were supposed to walk away with.

Crypto adoption is easier with stablecoins

It may not be as well outlined but government organizations are also very interested in integrating cryptocurrencies on their platforms and in the general economy eventually. Unfortunately, though, we see the same issue here. Politicians can’t risk the massive volatility of cryptos as they’d have to face thousands of complaints from the populace when something goes horribly wrong.

Therefore, having a cryptocurrency directly tied to the country’s fiat currency is the ideal way to go with this. It would not necessarily be like printing more money, but an exchange base for digitizing the banknotes people already have.

It would provide the exact advantages that everybody likes in cryptos and not put people’s savings or spending funds in jeopardy.

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Born in Bucharest, Marius is the founder of Crypto Adventure. Since his first contact with Bitcoin and cryptocurrencies, he never stopped believing that they are one of the most important innovations of our time, which will forever change the way business is done.