Ivan on Tech Academy provides latest insights and reports about the blockchain industry.
2020 was a highly eventful year for the cryptocurrency market. However, it looks like 2021 could be the year when the crypto sector really takes off. At the moment of writing, Bitcoin is pushing new all-time highs and is trading north of $49,000. What’s more, the wider cryptocurrency market has continued the rally seen during the last few months of 2020 and January of 2021. As such, one can only imagine what the rest of 2021 could hold. Nevertheless, one asset class is somewhat overshadowed by the past weeks’ dramatic 2020 Bitcoin bull run - stablecoins. Although these crypto assets’ more stable nature can make them less attractive during bull runs, they are nonetheless effective tools to avoid volatility. Consequently, let us look at stablecoins in 2021, and some of the biggest actors in this niche.
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Cryptocurrencies are frequently criticized for being volatile by many traditional traders, bankers, and media pundits. Many still tout gold as the only stable store-of-value alternative against the dollar. When considering the comparison between gold and cryptocurrencies, Vice Chairman of Berkshire Hathaway Charlie Munger views it simply. Man cannot make more gold, but he can make more Bitcoin.
Despite this misunderstanding, however, not all cryptocurrencies lack stability. Some are tied to real world assets like gold or the dollar. These cryptocurrencies are often named stablecoins due to their relative stability versus coins like Bitcoin or Ethereum.
Although, stablecoins may seem redundant at first. Their implementation allows for such innovations as a more private store and transfer of wealth, units of stable worth on decentralized exchanges,
Some stablecoins pit their value against cryptocurrencies that users have put up for collateral. Other stablecoins have a...