{"id":313374,"date":"2021-08-01T13:00:26","date_gmt":"2021-08-01T10:00:26","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/whats-a-stablecoin-this-blockchain-expert-explains\/"},"modified":"2021-08-01T13:00:26","modified_gmt":"2021-08-01T10:00:26","slug":"whats-a-stablecoin-this-blockchain-expert-explains","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/whats-a-stablecoin-this-blockchain-expert-explains\/","title":{"rendered":"#What\u2019s a stablecoin? This blockchain expert explains"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a2a7ac8d712b\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a2a7ac8d712b\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/whats-a-stablecoin-this-blockchain-expert-explains\/#Why_stablecoins_matter\" >Why stablecoins matter<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong>#What\u2019s a stablecoin? This blockchain expert explains<\/strong>&#8221;<\/p>\n<div>Stablecoins are a type of <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\/us\/topics\/cryptocurrency-8321\">cryptocurrency<\/a> linked to an asset like the U.S. dollar that doesn\u2019t change much in value.<\/p>\n<p>The <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/coinmarketcap.com\/view\/stablecoin\/\">majority of the dozens of stablecoins<\/a> that currently exist use the dollar as their benchmark asset, but many are also pegged to other <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.investopedia.com\/terms\/f\/fiatmoney.asp\">fiat currencies<\/a> issued by governments like the euro and yen. As a result, the price of stablecoins fluctuates very little, unlike high-profile cryptocurrencies like Bitcoin and Ethereum that <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.cnbc.com\/2021\/05\/19\/why-is-bitcoin-so-volatile.html\">are prone to sudden ups and downs<\/a>.<\/p>\n<p>The <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.investopedia.com\/terms\/t\/tether-usdt.asp\">first stablecoin, created in 2014, was Tether<\/a>, which many other stablecoins are modeled after. Users receive one token for every dollar they deposit. In theory, the tokens can then be converted back into the original currency at any time, also at a one-for-one exchange rate.<\/p>\n<p>As of July 28, 2021, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/coinmarketcap.com\/view\/stablecoin\/\">there were about US$62 billion in Tether outstanding<\/a>, or a bit more than half of the $117 billion market capitalization of all stablecoins worldwide. The next-largest is known as USD Coin, which has a market cap of about $27 billion.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Why_stablecoins_matter\"><\/span>Why stablecoins matter<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Originally, stablecoins were primarily used to buy other cryptocurrencies, like bitcoin, because many cryptocurrency exchanges <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/news.bitcoin.com\/bitcoin-exchanges-victim-banking-problems\">didn\u2019t have access to traditional banking<\/a>. They are more useful than country-issued currencies because you can use them 24 hours a day, seven days a week, anywhere in the world \u2013 without relying on banks. Money transfers take seconds to complete.<\/p>\n<p>Another useful feature of stablecoins is that they can work with <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.investopedia.com\/terms\/s\/smart-contracts.asp\">so-called smart contracts<\/a> on blockchains, which, unlike conventional contracts, require no legal authority to be executed. The code in the software automatically dictates the terms of the agreement and how and when money will be transferred. This makes stablecoins programmable in ways that dollars can\u2019t be.<\/p>\n<p>Smart contracts have given rise to the use of stablecoins not only in seamless trading but also lending, payments, insurance, prediction markets and <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/stanford-jblp.pubpub.org\/pub\/rise-of-daos\/release\/1\">decentralized autonomous organizations<\/a> \u2013 businesses that operate with limited human intervention.<\/p>\n<p>Collectively, these software-based financial services are known as decentralized finance, or DeFi.<\/p>\n<p>Proponents hold that moving money via stablecoins is <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.coinbase.com\/learn\/crypto-basics\/what-is-a-stablecoin\">faster, cheaper and easier<\/a> to integrate into software compared with fiat currency.<\/p>\n<p>Others say the lack of regulation creates big risks for the financial systems. In a recent paper, economists Gary B. Gorton and Jeffery Zhang <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/dx.doi.org\/10.2139\/ssrn.3888752\">draw an analogy<\/a> to the middle of the 19th century era when banks issued their own private currencies. They say stablecoins could lead to the same problems observed in that era, when there were frequent runs because people couldn\u2019t agree on the value of privately issued currencies.<\/p>\n<p>Worried that stablecoins could pose risks to the financial system, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.bloomberg.com\/news\/articles\/2021-07-27\/tether-facebook-coin-spur-worry-at-yellen-s-closed-door-meeting?srnd=premium&amp;sref=Hjm5biAW\">regulators have also taken greater interest<\/a> in them recently.<\/p>\n<p><em>The Conversation U.S. publishes short, accessible explanations of <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">news<\/a>worthy subjects by academics in their areas of expertise.<\/em><!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img loading=\"lazy\" decoding=\"async\" style=\"border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;\" alt=\"The Conversation\" width=\"1\" height=\"1\" class=\"js-lazy\" src=\"https:\/\/counter.theconversation.com\/content\/164812\/count.gif?distributor=republish-lightbox-basic\"\/><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: https:\/\/theconversation.com\/republishing-guidelines --><\/p>\n<p><noscript><img loading=\"lazy\" decoding=\"async\" style=\"border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;\" src=\"https:\/\/counter.theconversation.com\/content\/164812\/count.gif?distributor=republish-lightbox-basic\" alt=\"The Conversation\" width=\"1\" height=\"1\" class=\"\" srcset=\"\"\/><\/noscript><\/p>\n<p><em>This article by\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\/profiles\/stephen-mckeon-505107\">Stephen McKeon<\/a>, Associate Professor of Finance, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\/institutions\/university-of-oregon-811\">University of Oregon<\/a>,\u00a0is republished from <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\">The Conversation<\/a> under a Creative Commons license. Read the <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\/what-are-stablecoins-a-blockchain-expert-explains-164812\">original article<\/a>.<\/em><\/p>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more like this article, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/technology\/\" target=\"_blank\" rel=\"noopener\">Technology category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/thenextweb.com\/news\/everything-need-know-stablecoins-syndication\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;#What\u2019s a stablecoin? This blockchain expert explains&#8221; Stablecoins are a type of cryptocurrency linked to an asset like the U.S. dollar that doesn\u2019t change much in value. The majority of the dozens of stablecoins that currently exist use the dollar as their benchmark asset, but many are also pegged to other fiat currencies issued by&#8230;<\/p>\n","protected":false},"author":1,"featured_media":313375,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/img-cdn.tnwcdn.com\/image\/hardfork?filter_last=1&fit=1280,640&url=https:\/\/cdn0.tnwcdn.com\/wp-content\/blogs.dir\/1\/files\/2021\/07\/Stablecoin-Tether-hed-drawkit-illustrations-5xlHjrzQO54-unsplash.jpg&signature=ecca4edff107eec2e734c5ee26467bae","fifu_image_alt":"","footnotes":""},"categories":[18],"tags":[],"class_list":["post-313374","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-technology"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/313374","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=313374"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/313374\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/313375"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=313374"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=313374"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=313374"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}