Stablecoins are cryptocurrencies that have lower volatility than conventional cryptocurrencies. They are pegged to other things, such as fiat currencies like U.S Dollar, GBP, and EUR, commodities such as gold and silver, or other cryptocurrencies such as Bitcoin.
Because of this, stablecoins are more popular than conventional cryptocurrencies when it comes to mainstream use. Many merchants who wouldn’t accept cryptocurrencies under any circumstances accept stablecoins for payment.
Although they generally serve as a more stablecoin option for cryptocurrencies, stablecoins can be used in different ways. In this guide, we name some of the ways you can use your favorite stablecoins in your investment journey.
To Buy Crypto Assets
Do you remember when Bitcoin buying was forbidden in China? The ban on cryptocurrencies meant that anyone found buying Bitcoin using the Chinese Yuan was committing a crime. The law however did not ban the use or purchase of stablecoins such as Tether USDT.
Therefore, Chinese investors decided to buy stablecoins using the Chinese Yuan, and then use the stablecoins to buy Bitcoin. It was at this time that stablecoins hit the highest level of popularity in China and the world as a whole.
Since then, the idea of using them to buy Bitcoin or any other crypto asset has not been ignored. If you’re in a country with laws like the one in China, you can use stablecoins such as USDT, USDC, and the rest to buy crypto assets like the Chinese did.
To Lock Profits
Investing in cryptocurrencies is a venture that requires a lot of calculations to do correctly and minimize risks. Many investors are excited about their assets rising in value during bull markets, but they don’t know how to harness the profits and keep them long after the bull market is over.
To take your profits in a bull market, you’ll need to sell the asset for fiat which is more stable in price, but what if you don’t wish to change your assets to fiat just yet? Stablecoins are a convenient option when it comes to this.
You can simply convert your asset that has increased in value into a stablecoin of your choice. This locks the profit you have made, stops the price volatility and makes it impossible for you to lose such profit as the price of the stablecoin doesn’t reduce in value since it is fixed.
This is one of the most important uses of stablecoins and if you didn’t know it before now, you should try it the next time you wish to take profit from a bull market. You don’t need to sell your assets for fiat if you don’t want to.
Another use you can put your stablecoins to is staking. There are several platforms that are dedicated to the staking of stablecoins. These include Curve Finance, Compound, Uniswap, etc. you can use these platforms to stake your stablecoins and earn real profits from them.
This is an excellent way to earn passive income on your stablecoin holdings. Some of the platforms sometimes pay interest as high as 100% in addition to other perks coming from the platform’s tokens.
If you have a stash of stablecoins somewhere, you may wish to consider putting them to this use and start earning passive income that you can’t earn otherwise.
For storing value
Another use for stablecoins is storing value. A store of value is anything that can maintain the value of an asset without suffering inflation. Fiat currencies don’t qualify as stores of value because they are designed to be inflationary, not so with stablecoins.
As their value is fixed because of the underlying asset or currency, they retain the value of the asset you converted into the stablecoin and you don’t have to worry about losing money at any time. This is why many investors have converted their fiat money into stablecoins.