Stable Coins Are A Waste Of Time
Or are they?
Most cryptocurrency investors believe that Bitcoin is the future of money.
They talk a lot about inflation and how the US dollar is constantly being eroded because the government prints money out of thin air. That’s true. The US has more currency in circulation than it ever has before.
That erodes the purchasing power of your dollar.
Bitcoin, on the other hand, is limited in quantity. The code only allows a specific number of coins to be mined and there is no way to change that.
The result is a stable currency that holds its value over the long term. It’s a great hedge against inflation.
But then, these same investors put some of their money into stable coins.
At first glance, that makes zero sense.
What’s a Stable Coin?
When you’re promoting Bitcoin as a hedge against the wildly inflationary US dollar, why would you then turn around and invest in a US dollar stable coin?
That seems counter-intuitive.
If the value of the US dollar drops, so does the value of your US dollar stable coin. Why would anyone do that?
There must be other reasons people want to hold a cryptocurrency that is pegged to this inflationary fiat currency.
In the crypto world, things move quickly.
When you hold a stable coin in a crypto exchange, it’s like having a loaded gun. When you need it, you’re ready.
It can take time to transfer fiat currency from your bank into an exchange. When the money is already in the exchange, you can use it right away.
Security and Privacy
It’s no one’s business what you do with your money. When you hold it in the crypto world, it’s available to transfer to anyone in the world at any time.
I understand that a stable coin is great for investors that want to take advantage of high-interest rates in the crypto world.
It’s an attractive option to move your savings out of a fiat bank where you are barely earning 1% into a crypto account where you can earn double-digit interest.
Now that you’ve learned a few reasons why someone might want to hold stable coins, do you still agree that stable coins are a waste of time?
If you’re a true believer in Bitcoin and the crypto world, you’d probably answer yes. But most of us are still hanging out with one foot in the boat, and one foot on the dock.
And that’s probably fine, for now.
Just don’t be left with too many US dollar stable coins when the US dollar crash comes.