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What is a stablecoin and how can it be used ?

Banxe Team
4 min read 26.06.2022
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As discussions about coins like Bitcoin and Ethereum's volatility become more and more common, we are starting to see cryptocurrencies being used for buying and selling simple goods and services, investments, donations, and even financing larger purchases.

Cryptocurrencies are now being looked at as an opportunity to solve some of the significant challenges faced by global economies, and that's likely to have a substantial impact on how we think of our significant purchases and investments. Today, we'll explain the basics of stablecoins and how they can be used. 

 

A stablecoin is a digital currency where the value is linked to a real-world asset like U.S. dollars, euros, or gold and does not have a fluctuating value like Bitcoin, Ethereum, Dogecoin, etc.

 

Stablecoins are a relatively new type of cryptocurrency that has recently gained popularity. With the ability to make payments with cryptocurrency, e-commerce and cross-border transactions have become much faster, cheaper, and more secure. Stablecoins are a true bridge between fiat money and cryptocurrecies.  

 

The synergy of traditional asset stability with crypto flexibility has proven to be a helpful tool for day-to-day use. Billions of dollars in value have flowed into stablecoins like USD Coin (USDC), USD tether (USDT), and other stablecoin as they've become some of the most popular and convenient ways to store and trade in the crypto ecosystem.

 

As classic cryptocurrency is slowly introduced into our economy, stablecoins are becoming a viable alternative to traditional fiat currencies. Here are some reasons why stablecoins are going to be valuable for our future:

  • Stablecoins are open, global, and accessible to anyone on the internet, 24/7

  • They're much cheaper for cross-border transactions (SWIFT could costs you up to $40 per transaction, while a transaction with a stablecoin could cost as low as $1)

  • They're much faster than traditional transfer methods (SWIFTcould take up to 5 days, while transfers with a stablecoin is complete in seconds)

  • Stablecoin aids crypto in faster adoption, due to its low volatility and understandable price

 

To simply your entry into the market, you can buy a stablecoin such as Tether USD (USDT). Then convert USD to USDC to make a cross-border transaction in cryptocurrency. You can also exchange BTC to DAI (a decentralized stablecoin that follows the U.S. dollar) and stabilise your income on the spot market.  

 

Stablecoins are a fast, cheap, and convenient way to adopt crypto and use it for daily payments and purchases. Moreover, it helps protect your crypto portfolio from high market volatility.

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