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Importance Of Stablecoins

By Yugocean | Crypto Champion | 4 Nov 2021

A stablecoin, true to the name, is a stablecoin; it is based on the mirror image of a real-world fiat currency.

Most of the stablecoins are based on United States Dollar (USD), like USDT, USDC, DAI, USDP. Even multiple exchange platforms have USD based native stable currencies, for example BUSD (Binance), GUSD (Gemini) etc.

There are mulitple other stablecoins too, which are based on fiat currencies other than USD; for examples Chinese Yuan based Qcash, Indonesian Rupiah based IDRT, Singapore Dollar based XSGD etc.

The price of a cryptocurrency is highly volatile, and it has negligible effect on a stablecoin in case the price rises or falls in the cryptocurrency market.

Therefore, stablecoin can protect the money of investors from the losses during market downturns; however, no investor will earn profit when the market will rise, as the value of the currency will remain stable.

So, one should invest in stablecoin only when there is a bear effect in the market, this will save the investor from the loss of the market crash.

When the bulls become dominant in the market, investors can also make a profit by buying the promising crypto from their stablecoins.

Stablecoins are not only for stop-loss and make profit, they are also useful for traders who can trade between different currencies like forex.

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