Stablecoins: An Overview
Stablecoins fulfil one simple function within the world of crypto. It helps participants in the crypto universe ground values to the real world without them having to leave it. Imagine a trader, Bob, who wants to buy and sell Bitcoin in order to profit from it. Bob uses money he has made in the real world (USD) to pay for it. Assume, that Bob, like the most of us, ‘on-ramps’ his fiat money into the crypto universe with the help of a centralised exchange - literally the only way to own crypto assets if you’re not a miner and if you don’t have a direct contact sending you Crypto (i.e. P2P) - then, at the moment you want to realize your profits, you’ll have to convert your BTC to fiat somehow. Without Stablecoins, you’ll have to take profits by converting it back to USD, effectively ‘off-ramping’ with every trade. With Stablecoins, however, you could take profits without having to off-ramp into fiat. Skipping this step is crucial for both convenience and cost savings. ...