The first quarter of 2020 has been a reality check for those with pipe dreams about virtual currencies performing as safe-haven assets. The volatile history of the digital asset market, exacerbated by the global pandemic induced recession, has demonstrated that unpegged cryptocurrencies are far from the panacea to our current financial woes. However, in the midst of all the tumult, stablecoins have emerged as viable shelters from the volatility of the crypto and convenient payment instruments that can accumulate value.
The key difference between stablecoins and other cryptos is that they are backed by real-world assets, be it fiat money — such as the U.S. dollar or euro — or commodities like gold or oil. As their name implies, stablecoins are able to provide the crypto community with the stability they get from the traditional monetary system and combine it with the advantages that stem from advanced blockchain technology. Given the current circumstances, crypto enthusiasts have been exploring the potential of crypto-collateralized stablecoins becoming a common use case and deriving the value of other cryptocurrencies used as collateral.
Stablecoin market share growing in time of uncertainty
The extreme volatility of the crypto market, caused by coronavirus-related FUD (fear, uncertainty, and doubt), has led to panic asset liquidation and many investors seeking out safer means