The impact of stablecoins on the market

[Callisto]

In my opinion, this is an important evolution in the world of cryptocurrencies, where stablecoins are becoming a key tool for providing stability and predictability in a highly volatile environment.
The rise in the use of stablecoins highlights the need for a stable medium of exchange for various cryptocurrency applications and day-to-day transactions.

[taufik123]

StableCOINs play the role of an intermediary in the event that the user wants to trade and does not want to withdraw for cash, but it is rare for anyone to use them as a long-term investment, as it is better and safer to withdraw to the dollar instead of taking risks using stable currencies, especially after the famous LUNA incident.
I do not expect there to be a boom in these currencies, especially since their number is limited compared to cryptocurrencies.

Stable coins are a guarantee of confidence in the safety of your assets. To a greater extent, traders use stable coins when the market is falling

More precisely, stablecoins become hedging assets that will protect your assets from higher crypto price fluctuations.
I also use USDT or USDC stablecoins when trading, and this provides better asset security.
Now the Stabelcoin pair is the main use for trading.

But as some other members have said, stablecoins also won't have a 100% guarantee of security, given how LUNA's demise with UST stablecoins cost its investors greater value.

[Gurujebs]

StableCOINs play the role of an intermediary in the event that the user wants to trade and does not want to withdraw for cash, but it is rare for anyone to use them as a long-term investment, as it is better and safer to withdraw to the dollar instead of taking risks using stable currencies, especially after the famous LUNA incident.
I do not expect there to be a boom in these currencies, especially since their number is limited compared to cryptocurrencies.

The mistake so many traders make is that they think Stablecoin is the same as dollar cash, but they are not the same and that is why UST crashed when the protocol was manipulated and then billions of dollars were rubbished and to now, nothing has been done about it. It is a lesson for everyone who used to keep money in stablecoin because I'm still surprised that a billion USDT was minted on Christmas day, not sure what they want to use that money for exactly.

There is no boom in these currencies but one is actually dominating the market and that is more reason why there should be a concern for the way the market is being handled, I don't wish to see anything happen to USDT but the day that happens, bitcoin will not only bleed, it will vomit his intestine that day because it will not be funny to watch.

[Peter90]

StableCOINs play the role of an intermediary in the event that the user wants to trade and does not want to withdraw for cash, but it is rare for anyone to use them as a long-term investment, as it is better and safer to withdraw to the dollar...

 

The US dollar is currently losing 8% of its purchasing power on a yearly basis.
That is the official inflation rate. The unofficial rate - probably much more near to reality - is double that.
That means that you are losing 8% of your wealth each year, if you keep your wealth in US dollars.

Better and safer?

[Peter90]

Stable coins usually have a constant value compared to fiat...

Only stablecoins backed by fiat 

Actually it's not even true for them.
Example: Think about a stablecoin backed by fiat Yen. For a Mexican, that stablecoin will lose value if the Yen loses value vs. the Mexican peso.

Your statement is true only if a) referred to $ backed stablecoins and b) from the point of view of a $ user (someone living in the USA).

[joniboini]

It is a lesson for everyone who used to keep money in stablecoin because I'm still surprised that a billion USDT was minted on Christmas day, not sure what they want to use that money for exactly.

Didn't Tether state that their token is backed by multiple assets, not necessarily fiat? I believe it is an open secret now that USDT is likely not fully backed by fiat 1:1, heck, there is a possibility that Tether doesn't even have the capital to liquidate all of their tokens to fiat if their customers asked them to. You should not be surprised if they keep printing more tokens, it doesn't necessarily mean $1 billion fiat is injected into the market, which is one of the criticisms for Tether and crypto in general. Tether, or anyone behind this activity, can use this and abuse the market quite easily.

[Peter90]

Didn't Tether state that their token is backed by multiple assets, not necessarily fiat? I believe it is an open secret now that USDT is likely not fully backed by fiat 1:1,

I just opened a thread, thinking of you 

What's backing USDT? Tether Reserves Breakdown





Tether assets backing USDT

Cash & Bank Deposits... 0,4%

I wouldn't say USDT is not fully backed by fiat... I would rather say USDT is fully NOT backed by fiat! 

[Callisto]

The rise in the use of stablecoins on the blockchain indicates the need for a stable means of payment in the face of cryptocurrency volatility. However, questions have arisen about replacing native tokens such as Bitcoin. Despite this, the trend demonstrates the vitality and diversity in the cryptocurrency ecosystem, requiring flexibility and constant adaptation to new trends.

[Learn Bitcoin]

What's backing USDT? Tether Reserves Breakdown

I am sure that you haven't checked the link you have pasted.
You should fix the link you provided. The title looks interesting to me.

I wouldn't say USDT is not fully backed by fiat... I would rather say USDT is fully NOT backed by fiat! 

I didn't verify if USDT is backed by fiat or not. Nobody could check I guess. But very recently, I came to know that Tether has another coin which is XAUt and according to them, this is fully backed by physical gold. They claim that they have 7643.71
KG gold which worth $502,719,255 at this moment. This is interesting. You can find more here https://gold.tether.to/

[SmartGold01]

Stablecoins are increasingly used on public blockchains and have become the primary means of transaction settlement. Despite the relatively stable usage of major cryptocurrencies, the value of transactions in stable coins accounts for the majority of settlements on the blockchain.

What does it mean?
Can you make an example of a cryptocurrency being used as a transaction settlement?

I thin what op is trying to say is that whenever someone trader and want to exit from market, to secure his funds he would trade all funds that stablecoin maybe when resuming market then he may buy back any currency out there to continue trading.
Stablecoin are mostly used when we are facing any market down time and secure investment some people may prefer trading their funds to usdt or dai, and I think DAI is the most reliable stablecoin to secure your investment.

[Peter90]

What's backing USDT? Tether Reserves Breakdown

I am sure that you haven't checked the link you have pasted.
You should fix the link you provided. The title looks interesting to me.

Thank you LB!!!




There you go 

What's backing USDT? Tether Reserves Breakdown

You can check what is backing USDT

But very recently, I came to know that Tether has another coin which is XAUt and according to them, this is fully backed by physical gold. They claim that they have 7643.71
KG gold which worth $502,719,255 at this moment. This is interesting. You can find more here https://gold.tether.to/

Thank you for this info too LB!
I'm going to look into it ...

[Peter90]

I think what op is trying to say is that whenever someone trader and want to exit from market, to secure his funds he would trade all funds that stablecoin maybe when resuming market then he may buy back any currency out there to continue trading.

Oh! Thank you SM!
I understand now

It looks like the same concept expressed by Spasybo

Stable coins are also a safe haven for investors as soon as they exit crypto without wanting to leave market.

Very true



The quote below is from 2019, but still valid

Reasons People Use Stablecoins

1. Exchanges: Cryptocurrency traders can reduce their exposure to Bitcoin by selling their Bitcoin for stablecoins. This allows traders to keep their wealth on an exchange without converting back into fiat.
This is useful for two reasons.
First, many exchanges take days to convert fiat into crypto, which means investors must wait to trade.
Second, converting back into fiat means a tax bill is coming soon, since most exchange on- and off-ramps now require KYC-AML.


2. Inflation hedge: People in countries with high inflation and hyperinflation can hold on to stablecoins in order to preserve their savings. Bitcoin is too volatile for most people in Venezuela. Instead, they would prefer to hold onto cryptocurrencies backed by gold or Swiss francs.


3. Interbank settlement: Interbank settlement is a trillion-US dollar industry, as discussed in the chapter on Ripple in the June 2019 edition of the Crypto Research Report published by Incrementum. Instead of giving away billions in revenue to Ripple, companies such as J.P. Morgan are releasing their own centralized stablecoins backed by fiat in order to settle transactions globally on a permissioned blockchain instead of legacy banking software.


https://ingoldwetrust.report/wp-content/uploads/2019/05/In-Gold-We-Trust-2019-Extended-Version-english.pdf
p247

[KingsDen]

Stablecoins are increasingly used on public blockchains and have become the primary means of transaction settlement. Despite the relatively stable usage of major cryptocurrencies, the value of transactions in stable coins accounts for the majority of settlements on the blockchain.

What does it mean?
Can you make an example of a cryptocurrency being used as a transaction settlement?

I thin what op is trying to say is that whenever someone trader and want to exit from market, to secure his funds he would trade all funds that stablecoin maybe when resuming market then he may buy back any currency out there to continue trading.
Stablecoin are mostly used when we are facing any market down time and secure investment some people may prefer trading their funds to usdt or dai, and I think DAI is the most reliable stablecoin to secure your investment.

The use of stable coins in the cryptocurrency industry is becoming a norm. This is because you can hardly see anyone who boosts that they do not require or use stable coin at any point in, be it a centralized stable coin or a decentralized stable. The cryptocurrency industry is a volatile market and it is not every time that anyone wishes to take risk. The price volatility makes traders to keep money in stable coins to be able to study the market.

[Litzki1990]

When there is excessive volatility in the market and many coins start to fall and prices drop a lot, many investors convert their money into stable coins. The value of stablecoins changes so little that it would be wrong to call them changes. Keeping the coin stable means that your capital will remain in the same state if kept in a stable coin the value will not increase or decrease. Stablecoins have considerable importance in the market and we see a lot of buying and selling of these stablecoins in the market. Investors overuse this stable coin so its market is always overbought.

[Fivestar4everMVP]

Stablecoins are increasingly used on public blockchains and have become the primary means of transaction settlement. Despite the relatively stable usage of major cryptocurrencies, the value of transactions in stable coins accounts for the majority of settlements on the blockchain.

What does it mean?
Can you make an example of a cryptocurrency being used as a transaction settlement?

I don't know if this has been answered, if it has, then please just ignore, but if you haven't, then I did say that this is very simple, using cryptocurrency as transaction settlement simply means using crypto to pay for goods and services.

I believe this is not something that is too complex to understand, but I still did give an example of how I bought a motor bike in 2021, it cost about $650 at the time, and it happened that I paid for the motor bike in full using bitcoin, and this was to someone who have never bought, owned or used bitcoin before, I did convince him myself.

So, using crypto currency for transaction settlement is simply using crypto currencies, like the stablecoins, to pay for goods and services in place of the dollars or any other fiat currencies.