This article was first published on Metal Blog
Most people who invest in cryptocurrency want to have a way to move money from one coin to the next, or to pull their investment out of a coin and place it somewhere safe. Converting from cash to crypto and back multiple times can cost you quite a bit in fees – so what’s the solution? Welcome to the world of stablecoins.
Stablecoins are one of the most important parts of the cryptocurrency industry and an area destined to see major adoption in the coming years. In this article, we’ll outline why stablecoins are important and what it means for you.
Stablecoins – Bringing Stability to an Unstable Market
Ask anyone who has been involved in cryptocurrency and they’ll tell you: this market is unstable and fluctuates constantly. That’s a feature, not a bug; one of the most loved things about cryptocurrency is the fast price action you can see on a particular coin. Bitcoin could be worth $10,500 today, and $12,500 tomorrow – wider price changes can happen even quicker, as has been the case with many altcoins in the past year.
Stablecoins are inherently different. A stablecoin has its price pegged to some other form of value; most coins are pegged to the US Dollar at a 1:1 ratio, but some coins are pegged to other assets, as is the case for Paxos Gold (PAXG). The benefit to a stablecoin is that it gives you a place to move your holdings that you can be confident will not change in value, no matter what. To understand how that works, let’s use an example.
The First-Time Investor
Let’s say you buy $250 worth of Bitcoin – all that you can afford right now. You enjoy watching its price change as the market grows; one day your holding is worth ...
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