Stablecoins: Examining Their Features and Limitations in the Cryptocurrency Landscape

What are stablecoins?

Stablecoins are a form of cryptocurrency that is tied to the value of traditional valuable assets, such as fiat money, precious metals, or even energy. These coins operate on the blockchain technology, which serves as their foundation.

The primary goal of stablecoin developers is to create a cryptocurrency that remains immune to volatility and inflation, making it convenient for exchanging assets, purchasing goods, investing, or storing capital. Stablecoins are typically pegged to an asset at a 1:1 ratio, with minor possible deviations in value.

Who benefits from stablecoins and why?

The relatively stable exchange rate of the US dollar against other currencies is widely accepted. While the dollar is still impacted by inflation, the effect is comparatively minor when compared to currencies in certain countries, which can experience annual devaluations of 15% or more.

Stablecoins can serve as an excellent alternative for individuals residing in countries with unstable national currencies and government-imposed capital controls. Additionally, stablecoins have the potential to reduce the number of intermediaries in the financial system, consequently lowering commission costs.

The stable value of stablecoins offers numerous opportunities for users, allowing them to preserve their savings without wasting time and resources. In the future, stablecoins may potentially become the foundation of the international lending and financial derivatives market.

Characteristics of stablecoins

The primary advantage of stablecoins lies in their stability. The value of a stablecoin directly correlates with the real asset it is tied to, resulting in minimal fluctuations in price. Furthermore, since stablecoins are backed by tangible assets, they can be used as investment instruments without the concern of sudden value depreciation.

Stablecoins backed by traditional currencies contribute to the wider adoption of cryptocurrencies, as they instill greater confidence in investors.

Drawbacks of stablecoins

Stablecoin exchanges typically require user verification. Some members of the cryptocurrency community argue that this compromises one of the fundamental principles of anonymity.

Many subsequent stablecoins lack originality, as they have been inspired by the first stablecoin, Tether, which was created in 2015.

Centralization is another concern, as the project owner holds all the support. Consequently, it is advisable for potential stablecoin purchasers to thoroughly research the history of the company and its owner before making any investments.

Integration of stablecoins in blockchains

Initially launched on the Bitcoin blockchain using the Omni Layer protocol, USDT (Tether) is now available on various blockchains, including Ethereum, Tron, Binance Coin, and EOSIO.

Paxos operates on the Ethereum blockchain.

USD Coin (USDC) was initially introduced on the Ethereum blockchain but has recently expanded its support to other blockchains, including Algorand, Solana, and Stellar.

TrueUSD is currently supported on the Ethereum blockchain, with plans to integrate it with the Avalanche blockchain in the first quarter of 2021.

In addition to the existing supported cryptocurrencies, MyCoinChange has expanded its range of supported digital assets to cater to a wider audience. Alongside USDT, which is currently available on both the Ethereum and Tron blockchains, MyCoinChange now offers support for several other stablecoins.

Users can now transact with Paxos (PAX), USD Coin (USDC), and TrueUSD (TUSD), all of which are exclusively available on the Ethereum blockchain. These stablecoins are backed by real-world assets and designed to maintain a stable value, making them suitable for users seeking price stability and reliable digital assets for their transactions.

By introducing Paxos, USD Coin, and TrueUSD, MyCoinChange aims to provide users with increased flexibility and choice when it comes to conducting transactions. Whether users prefer the Ethereum blockchain or are specifically interested in these particular stablecoins, they can now leverage MyCoinChange to seamlessly trade and manage these assets within their portfolio.

Furthermore, the addition of these stablecoins aligns with MyCoinChange’s commitment to fostering a secure and reliable cryptocurrency ecosystem. By incorporating stablecoins that are built on established blockchains and have gained recognition within the crypto community, MyCoinChange aims to provide users with a trusted platform for their digital asset needs.

As the cryptocurrency market continues to evolve, MyCoinChange remains dedicated to expanding its supported assets, ensuring that users have access to a diverse range of cryptocurrencies while prioritizing security and user experience.

1. USDT. Between 2017 and 2021, Tether Limited blacklisted 280 Ethereum addresses at the request of law enforcement agencies.
In 2021, Tether will pay a $18 500 000 fine due to false information about the company’s reserves in accordance with the decision of the Attorney General of New York State.
2. USDC. In June 2020, one Ethereum address was blocked at the request of law enforcement agencies.

Stablecoins: Examining Their Features and Limitations in the Cryptocurrency Landscape

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