In the Path to Mainstream Adoption, Stablecoins May Help the Crypto Industry

Considering that the lack of spending since the market crash of 2008 has been mostly about apprehension in the market, it should come as no surprise that the volatility of cryptocurrency has had a similar result. Most of the tokens in the space are subject to changing values over time, and that can lead investors away, but what about stablecoins?

Stablecoins are the only digital assets that the crypto market offers at the moment that doesn’t fluctuate in price by much. Bitcoin was originally brought to the market with the hope of replacing fiat cash, utilizing an electronic version of cash. However, there is a lot of ways that Bitcoin has not exactly offered what the community needs. Though Bitcoin rose for a while, it is presently down by over 80% of its highest value. Fluctuating value like this only makes institutional investors worrisome. That is when the concept of stablecoins arose.

Unlike the rest of the crypto community, stablecoins are mostly protected from volatility. With liquidity managed by the platform that offers it, these crypto assets do not change their price by more than a few cents over or under the main fiat it uses. Though the original stablecoin came out of USD, there is been multiple countries that have pegged their stablecoins to their currency as well. However, there are other asses that these tokens can be pegged to. Some stablecoins that are presently included as stablecoins are TrueUSD (TUSD), USD Coin (USDC), the Gemini Dollar (GUSD), and the Paxos Standard (PAX). They are all pegged to the USD.

There are digital coins that work in a similar way to stablecoins because they are pegged directly to collateral crypto. A perfect example of this type of token is Maker, which presently holds the #16 position on CoinMarketCap. There are some crypto proponents that say that stablecoins essentially defeat the purpose of decentralization, since there are some stablecoins that have to be linked with a centralized asset.

Ultimately, all cryptocurrency assets hope for is to create a virtual asset that lacks volatility in the market, while having enough liquidity the remain stable. If this kind of arrangement could take place, all crypto and decentralization enthusiasts would be living the dream. It could ultimately bridge the gap between fiat and crypto and allow mainstream investors to feel secure in entering the market to some level. However, the evolution to this point may take a little while.

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