Stablecoins are digital assets pegged to fiat currencies and other crypto assets just so stability can be maintained. Stablecoins offer the best of both worlds by coupling the speed and security cryptocurrency offers with the stable value that fiat currencies hold. Stablecoins have a wide range of benefits in the likes of safety, speed, and peer-to-peer transactions. Stablecoins are witnessing tremendous growth these past few years, with the Stablecoin market reaching a total supply of 12 billion. Over 200 Stablecoins have been announced, with more coins still under research and development. So why would someone need Stablecoins?
The cardinal need for Stablecoins is just one factor - Volatility. Global cryptocurrencies like Bitcoin and Ether are highly volatile, which means their value is constantly changing. For example, in 2017, the price of Bitcoin increased by $19,000. This is not sustainable for investors and traders who want the market to be stable. Hence, Stablecoins that can hold the un-volatile value of fiat currencies were created. These cryptocurrencies functioning in a decentralized environment have other advantages like trust and adding value to the Stablecoins. Cross border transactions can also be made quickly with reduced additional costs.