Blockchain continues to change the global economy, with the promise of a decentralized future slowly becoming a reality. As a result, cryptocurrencies have been growing in relevance over the past decade, particularly with the evolution of industry-related concepts like decentralized finance (or DeFi) – the emerging, fully automated financial services sector developing on blockchain technology.
However, cryptocurrencies continue to fluctuate in value. While this fluctuation indicates an investment opportunity for some, it represents risk for other public users.
Stablecoins play a major role in reducing this associated risk, helping users park their capital into stable-value decentralized assets over longer periods, normally pegged to the value of certain fiat currencies. Using stablecoins also widens access to inclusive financial services alongside novel use cases such as money markets and accruing yields, or interest.
Blockchain, although once a relatively young technology, has the potential to disrupt virtually every major global sector, making stablecoins even more relevant when it comes to powering the emerging decentralized Internet and its future.
Unlike other cryptocurrencies, though, stablecoins are controlled by centralized organizations, which can open them up to regulatory over-reach.
Stablecoins represent an asset class that combines a bit of both worlds–the programmability, security, and speed of cryptocurrencies, with the price movements of fiat currencies.