Due to the volatility of the cryptocurrencies, many of the investors are not able to use the digital assets transactions seamlessly. This has also acted as a hurdle in the adoption of digital currencies as the main method of transactions. However, industry experts have come up with one of the best solutions in the form of stable coins. The blockchain transactions with stablecoins are designed for achieving the price stability that helps in retaining the main components of the digital currencies.

What are stablecoins?

Stable coins help the users to access all the benefits of the digital assets on various profiles. Stable coin is the token that is pegged to the price of the national currency to counter its volatility. However, the main question is why we should use a stablecoin. Bitcoin and Euro are some of the main digital currencies that are being used across the globe.

In the year, 2017, the price of Bitcoin got raised from $ 1000 to $ 20,000. This shows that Bitcoins were not sustainable enough to give the users and the investors and assurance of higher stability in the market. Small investors cannot handle this kind of volatility. The need for a stablecoin was great. This is especially because digital currencies are highly helpful in backing cross border transactions. They are using crypto tokens with stable fiat assets that can add higher value to the build-up of greater interest of the investors and the users.

Different types of stable coins

1. Fiat-backed Stable Coins: These are digital currency tokens that are related to the use of a specific value of the cryptocurrency. The fiat-backed stable coins hold their value at a ratio of 1:1.

2. Non-collateralized Stable Coins: These are the stablecoins whereby supply volume changes the value of the money. In smart contracts, the stable coins get sols if the price falls below the pegged currency, and when the value of stablecoins rises above the pegged currency, these get supplied to the market.

3. Cryptocurrency-backed Stable Coins: These work similar to the fiat-backed stablecoins, and these are not based on a 1:1 ration for the crypto coin collateral.

4. Commodity-collateralized Stable Coins: These stablecoins are backed by the different types of assets like gold or real estate. These stablecoins require a tangible asset with a specific value. These are especially useful for investors to help invest in real estate or precious metals across the globe.

Reach out to the EURST to learn more about blockchain transactions with stablecoins and a unique Euro-backed stablecoin that aims to bring greater stability into the European economy.