Stablecoins are an exciting asset class. While they share many characteristics with other cryptocurrencies, they’re also different enough to warrant their classification. Hence, investors may find that stablecoins have a lot to offer and are worth considering as part of a diversified portfolio. Stablecoins are an attractive option when it comes to cryptocurrency investment. You can use them to hedge against losses or diversify your crypto holdings with something less risky than other coins. There are many reasons why you might choose to invest in a stablecoin, and we’ll look at some of them here.
1. Remove the Volatility of Cryptocurrency but Retain Its Inherent Benefits
Cryptocurrency holds many benefits over fiat currency. However, one hindrance to widespread adoption is its volatility. However, stablecoins help removes and mitigate cryptocurrency volatility while retaining inherent benefits. They are a bridge between traditional currencies and cryptocurrencies.
Removing volatility allows more people to use cryptocurrency as a medium of exchange, which could positively impact both consumers and businesses. It also makes it easier for merchants to accept it as a form of payment because there’s no fear that its value will drop overnight due to speculation or other factors. If you want an entirely decentralized stablecoin, you can buy DAI with AQRU and store them on your Ledger.
2. Can Facilitate Seamless Transfer of Transactions in Blockchain System
One great advantage of investing in stablecoins is their seamless transfer across various blockchain platforms. It makes them stand out from other currencies, which are not transferrable to and from different blockchains without third-party involvement or prior arrangement.
Stablecoins are flexible, stable, and easy to transfer between platforms. Hence, these coins can provide unique solutions to businesses that accept payments using cryptocurrencies. Stablecoins will also make it easier for new users to get involved with cryptocurrency trading since they do not need technical knowledge about using and trading digital assets.
3. Offers Best of Both Worlds: Stability of Fiat, and Efficiency and Speed of Crypto
Unlike fiat money or cryptocurrencies, stablecoins exist as a middle ground to eliminate some of their significant problems. They can become a trusted source for everyday transactions and investment opportunities alike because they fall under both categories. Since there’s no volatility risk with a stablecoin, investors won’t have to worry about drastic price swings that hurt their portfolio or business—and merchants can rest easy knowing they won’t lose out on profits due to wild fluctuations. Also, stablecoins are more efficient than other crypto-assets since they don’t require high transaction fees as other crypto-based payments do. It’s beneficial in markets where people need to make micro-payments frequently, such as remittances from workers overseas back home.
However, thanks to blockchain technology, stablecoins retain all of their security benefits, efficiency, privacy, and speed. As a result, merchants can receive funds instantly without waiting days or weeks for international bank transfers or credit card payments to clear. Thus, it makes stablecoins ideal options for e-commerce businesses looking to expand internationally.
4. Gives Investors a Secure Way to Store Value
There is a growing movement to use digital tokens as a hedging tool against price volatility from hedge funds to individual investors. These days, all it takes is one bad tweet or comment from an administration official to send an investor’s portfolio spiraling. Cryptocurrencies have become popular not only because they’re virtual and global but also because they give holders access to currency diversification—the ability to store value in volatile economies without fear of government seizure or financial collapse.
For example, if you live in an unstable region, you might want to buy DAI stablecoins to protect your wealth from hyperinflation and capital controls. The new wave of investment has created a demand for cryptocurrencies that can be helpful as a haven during times of market turmoil. However, always remember to use decentralized stablecoins instead of the centralized entities that aren’t necessarily trustworthy.
5. Suitable for New Entrants into The Crypto World
One of the biggest arguments against cryptocurrency is that it is too difficult for newcomers to understand. But, there has been a lot of progress in making cryptocurrencies user-friendly, and there is still plenty more to come. If you can get someone into crypto with a decentralized stablecoin like DAI, chances are they will be comfortable enough with their experience to invest further down the line.
Many people have invested further down because they had an initial positive experience with a stablecoin. It offers easy access to be part of blockchain technology without having to go through all of its technicalities. It makes it ideal for new entrants who want to try out blockchain technology but don’t know where to start.
Most people who use cryptocurrencies prefer not to carry around price volatility with them as they go about their day. However, with blockchain-based cryptocurrencies like Bitcoin or Ethereum, investors must endure considerable swings in value over a short period. It can make it difficult for many to invest in crypto for long periods at a time, which is where decentralized stablecoins come into play. The idea behind these crypto tokens is that they represent a store of value that won’t lose its worth.