Stablecoins might just leave Bitcoin behind in the cryptocurrency market.
Stablecoins are gradually taking the lead in the cryptocurrency market. While Bitcoin remains the largest cryptocurrency in terms of market capitalization and investment trends, stablecoins are on the retreat and picking up the pace and impressive organizations and large seasoned investors with potential. To Outsiders, cryptocurrency is all about bitcoin dominance and various companies like PayPal now allow bitcoin transactions. But price volatility plays an important role in determining the future of cryptocurrencies. That being said, stablecoins have much lower volatility compared to cryptocurrencies like Bitcoin, which is very famous for its price drops.
What Makes Stablecoins Reliable?
Stablecoins are cryptocurrencies that are backed and supported by an underlying asset. While they can be pegged to any fiat currency, the US dollar is a popular choice. Since 2018, stablecoins in the crypto space have grown exponentially to avoid currency fluctuations. Let’s dive deeper and understand why stablecoins are evolving to take the reins of bitcoin, a driving force of the future.
Lower Market Volatility
The lower the volatility, the higher the value. This is an important benefit related to stablecoins that generate individual and institutional interest. With bitcoins, investors are unwilling to use them as a means of payment because of their bull run. They prefer to use it as an investment and ask for large sums of money in the long run (if that happens). Stablecoins serve the purpose of creating cryptocurrencies.
Blockchain Developments
Bitcoin cannot blindly lead the cryptocurrency market without serving a purpose. For example, we have Ethereum, which enables DeFi, and XRP helps banks optimize transfers and international transactions. Stablescoins would like to further develop its blockchain networks to enable interesting use cases. For example, Tether offers faster and cheaper transactions than Bitcoin.
The Purpose
Bitcoin’s original purpose was to create a decentralized and distributed payment system, which is still pending after almost a decade of its inception. The alternate version of this purpose has surfaced in stablecoins. To fulfill this core purpose, cryptocurrencies should be liquid, have low volatility and be integrated into an established financial institution. All of these boxes are checked by stablecoins. Cryptocurrency applications and use cases gradually evolve in many ways that were unimaginable in the days of Bitcoin was launched. In fact, Bitcoin cash is a cryptocurrency that was introduced as a fork of the Bitcoin network because Bitcoin could not meet the standards and goals it set. Global payments company Visa shares a similar view on stablecoins, which have the potential to stay ahead. Global payments company Visa shares a similar opinion about stable coins having the potential to lead the pack. Most of the exciting and interesting applications for Cryptocurrency and blockchain applications are slowly becoming dependent on stablecoins and becoming the foundation for creative use cases as they are less volatile and backed by an established and relatively stable asset, be it the US dollar or the euro. Sure, Bitcoin leads the way in terms of price levels, investor awareness, and market attractiveness, but other cryptocurrencies in the market are evolving behind Bitcoin price value on a daily basis.
