3 Benefits of Stablecoins
Have you ever heard of stablecoins? While they might sound like a new cryptocurrency, they refer to any cryptocurrency that’s tied to a commodity, financial instrument, or another cryptocurrency. This helps keep their value stable—hence the name! So, what are the advantages of stablecoins? Is the hype around them justified?
Here’s a look at three key benefits of stablecoins.
1. They’re Completely Transparent
If you transferred $10 to your friend, the only parties that’ll know are you, your friend, and the bank. In other words, the transaction wouldn’t be transparent for everyone to see. In contrast, stablecoins—like all cryptocurrencies—are fully transparent because transactions are recorded on a public blockchain that can be viewed by anyone with internet access.
2. They Make Transactions Faster by Automating Escrow Payments
Imagine paying 100% upfront for something only to be defrauded later. You’d be fuming! That’s where escrow comes in. Escrow payments involve the use of a third party that holds funds until the obligations in a contract between two parties are fulfilled.
Traditional escrow payments are monitored by people who check whether contractual obligations have been fulfilled before releasing funds or not. In contrast, stablecoins streamline escrow payments by auto-releasing funds as soon as contractual obligations have been met. Moreover, they operate on blockchains that run 24/7—so escrow payments using stablecoins are released immediately!
3. They Command Lower Transactional Fees Than Credit Cards
Did you know the average credit card company charges between 1.5% and 3.5% per transaction? This incentivizes businesses—especially smaller ones—to charge a premium to customers paying via credit card.
In comparison, stablecoin transactions are subject to far lower fees—making them an attractive alternative to traditional banking in the eyes of both merchants and consumers.
Now that you know some of the major benefits of stablecoins, why not expand your crypto knowledge further with the help of a crypto news and coin markets site for beginners!
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