Stablecoins: what are they and why are they important

Have you ever wondered why cryptocurrencies that mimic a dollar are important innovations? Why would you hold a crypto dollar instead of a "normal" dollar?

At Coinstash, we’ve identified three ways that you could use stablecoins in your portfolio.

Disclaimer: Coinstash is not providing financial advice and are not licenced to do so. This article is not intended as legal, financial or investment advice and should not be construed or relied on as such. Cryptocurrencies are risky. Before making any commitment of a legal or financial nature you should seek advice from a qualified and registered legal practitioner or financial or investment adviser.

1. Preserve value

Cryptocurrencies like Bitcoin, can be volatile and stablecoins are an "on-chain" solution to preserve value if you want to take a break from the volatility without leaving the ecosystem. Stablecoins can also be used for making payments, settling invoices and taking out loans, as the value of your expense or debt is easy to interpret against other assets priced in fiat currency.

2. Move wealth

Stablecoins are optimal for transferring wealth between wallets in a matter of minutes while acting as a safe haven from the volatility of the crypto market.

Bank account transfers can often take over 24 hours (more than a few days in the case of international transfers) with high fees, making fiat currency too slow if there is a need to remit money quickly and efficiently.

If you’re closely watching the market for a good chance to buy into crypto, and want to quickly transfer your wealth into your next investment, stablecoins will let you swiftly buy into any great opportunities you see in the market.

3. Income generation strategies

Due to their high liquidity and low risk nature, stablecoins are in high demand across markets. As a result, people are willing to borrow stablecoins just like they do if they were to borrow fiat dollars. Interest on the loan is paid to lenders. In the same way you can mortgage a home at the bank, stablecoin loans are often secured by other cryptocurrencies to minimize loan default risk.

Stablecoin lending can be a lucrative, market neutral strategy for investors who want consistent returns, rather than riding the ups and downs of the crypto market.

Looking to own some Stablecoins as part of your crypto investment portfolio? Get your Tether (USDT) or USD Coin (USDC) on Coinstash today!

Coinstash Earn also allows you to earn up to 7.2% pa on your stablecoins. Start earning now!

Disclaimer: Coinstash is not providing financial advice and are not licenced to do so. This article is not intended as legal, financial or investment advice and should not be construed or relied on as such. Cryptocurrencies are risky. Before making any commitment of a legal or financial nature you should seek advice from a qualified and registered legal practitioner or financial or investment adviser.