What is a stablecoin and how does it work?

[Etini]

My friend, Michael is an expert in cryptocurrency. I am a complete novice when it comes to crypto and how it works. I passively follow it and I know the trends of when it is going down or coming up. But I stated hearing something from Michael. He said that there is something that is called a "stablecoin".

He went on to explain that with a stable coin, one need not worry about the coin experiencing a sudden dip. I got more confused. He went further to say that any site you work with should pay the workers in a stablecoin.

Please, what is a stablecoin. Does it mean that I truly need not worry if I hold a stable coin? Which and which cryptocurrencies are stablecoins? What is the criteria used to classify them as stablecoins? Does Trendri pay in stablecoins? Please gurus in the house, share your knowledge so I can understand.

 

[Suba]

Stablecoin is a type of crypto whose value is pegged both to crypto and gold, if not money. so the value is more stable following the changes in the value of the guarantor asset.
How Stablecoins Work
Based on the type, there are three ways stablecoins work, namely
Equated with fiat currency, Equated with other cryptocurrencies and Equated through smart contracts

 

[Jasz]

Stablecoins are a new type of cryptocurrency that aim to provide investors with a more stable value. A stablecoin is a digital currency that has its value pegged to another asset (usually fiat currency like the US dollar) instead of being traded on its own exchange. It’s a way to make cryptocurrency more accessible to everyone, and it’s especially popular among those who want to invest in cryptocurrencies but don’t want to risk their money by trading them on an exchange.

Stablecoins are often used as an alternative for fiat currencies because they have very low volatility, which means they don’t fluctuate as much as traditional currencies do. This makes them appealing for everyday use and speculation alike, since you can buy one with confidence knowing that its value won’t suddenly drop like other cryptocurrencies do. Stablecoins are cryptocurrencies that have been designed to maintain their price over time and preserve their value relative to national currencies, commodities or other stable objects like the US dollar.

 

[Lymphography]

The cryptocurrency whose value is tied to another currency is a stable coin. You may take Tether for example. It’s backed by the US Dollar so its price remains stable as compared to volatile cryptocurrencies. So yes, you don’t need to worry about the price fluctuations if you are getting paid in a stable coin. I also accept USDT and Dai with CapitalWallet for the same reason. Even if you are getting payments in volatile coins, you can instantly convert them into a stable coin of your choice.

 

[saoussen5765]

The cryptocurrency whose value is tied to another currency is a stable coin. You may take Tether for example. It’s backed by the US Dollar so its price remains stable as compared to volatile cryptocurrencies. So yes, you don’t need to worry about the price fluctuations if you are getting paid in a stable coin. I also accept USDT and Dai with CapitalWallet for the same reason. Even if you are getting payments in volatile coins, you can instantly convert them into a stable coin of your choice.

Many people predict that the end of the cryptocurrencies if the value of USDT shut down from 1 $ to 0 $ if there is something that causes this decrease of coin value.

 

[Sotherefore]

Because of the bearish market that is happening for almost a year now , a lot of crypto traders are now storing most of their cryptocurrency in stablecoin because stablecoin prevent the depreciation of their asset because it is stable just exactly like the US dollars.

I don't know, but it works through a complicated algorithms that it has to follow the exact value of the US dollars and there are different type of stable cryptocurrency in existence you can choose from. Personally I prefer the busd and the usdt whenever I am interested to store some of my cryptocurrency in stablecoins.

A lot of people may prefer to hold stablecoin most especially if they are not interested to invest in volatile cryptocurrency , probably because they may need to use the money anytime soon and as we all understand investing money in cryptocurrency should only be done with money that can't be needed easily as it can depreciate quickly.