Should People Use Stablecoins Instead of Fiat Currency? 

There are a large number of varieties of cryptocurrencies, and one of them is stablecoins, whose rate is directly tied to the price of a fiat asset. They can be any currency (for example, the dollar or the euro), precious metals (gold) or various energy resources (oil).

At first glance, such tokens are very convenient for making payments in the field of decentralized finance, so many people want to buy USDT with credit card without verification (or other stablecoins). However, they also have disadvantages — let’s discuss the pros and cons in detail. 

Pros Of Using Stablecoins

By becoming a client of the Tether system or any other network with stablecoins, clients will enjoy:

  • the stable price rate of tokens: as a rule, 1 coin costs the same as a fiat asset, so it is convenient to use them to pay for various services and purchases on the Internet;
  • super high transaction processing speed: of course, it depends on the features of the blockchain system, but usually, they process transactions even faster than Visa, MasterCard, Maestro, American Express and any other traditional tools;
  • risk management: many clients who hold capital in a fiat asset in countries with an unstable economy can diversify the risks of losses through the use of stablecoins;
  • rather insignificant volatility: according to statistics, the rate of such cryptocurrencies fluctuates only in the third or fourth decimal place — no sharp jumps in price, which can upset the owners of Ethereum, Litecoin, and other tokens.

In addition, most stablecoins ensure the anonymity of transactions (unless, of course, this is contrary to state law).

Cons Of Using Stablecoins

But such systems cannot be called ideal, because some shortcomings can ruin the experience of using stablecoins:

  • centralized network management: a company that accepts assets, issues coins and stores them, is responsible for their circulation — that is, if the owners of the company decide to curtail the project, then its development may rapidly fade;
  • stablecoins, unfortunately, are subject to inflation, as are the main fiat assets (in order to prevent the risk of losing funds due to inflation, experts advise keeping capital in stablecoins with reference to different types of assets).

It is also worth considering that the cryptocurrency market is a relatively new phenomenon, so not all countries have already created appropriate legislation to regulate this area.

 

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