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Kh.R.Taghiyev , U.F.Yusifov, M.R.Taghiyev: Stablecoıns and Theır Specıfıc Features

Stablecoins backed by precious metals maintain their value, relying mainly on gold
and other precious metals. These stablecoins are centralized, and some crypto users
may see this as a drawback, but this feature protects them from volatility in the
crypto market.

Algorithmic stablecoins are not supported by any asset, which makes it difficult to
accept it as a stablecoin. These types of stablecoins use a computer algorithm to
keep the coin’s value from fluctuating too much. If the price of an algorithmic
stablecoin is pegged to $ 1, but the value of the stablecoin rises higher, the algorithm
would automatically release more coins into circulation to lower the price. If the
price falls below $ 1, the algorithm would reduce the supply and bring the price to
the previous level.

WHAT İS THE DİFFERENCE BETWEEN STABLECOİNS AND
TRADİTİONAL CURRENCİES?
Cryptocurrencies and traditional currencies have two main features: they provide
unimpeded payments between the two parties and act as an expression of value.
Traditional currencies, are straightforward. You can spend the traditional money in
cash or transfer it to your debit or credit card. Traditional currencies can be used for
direct purchases, money transfers, payment of invoices, taxes, etc. Most of the
existing traditional currencies are used only for domestic payments. When spending
abroad, you need to convert them into other currencies. In these transactions, an
exchange fee is usually applied. Although the commission for the exchange is not
specified, there is always an exchange rate margin, which is the difference between
the rate at which banks and currency exchange services trade and the rate offered to
consumers (Pay Space Magazine July 2021, Nikkei Asia July 2021, Bank of
Thailand: Press Release No. 16/2021).

As for cryptocurrencies, they also offer features that the traditional monetary system
cannot currently offer: cryptocurrencies can be spent and received by anyone,
anytime, anywhere in the world, and without the need for a bank or government.
This is the most revolutionary aspect of cryptocurrencies. Stablecoins can also be
used for daily shopping at traditional outlets.

With multi-currency wallets, you can quickly convert crypto into traditional money.
For example, Trust Wallet, one of the most popular multi-active crypto wallet,
allows you to spend your stablecoins by converting them into traditional money and
cashing them out. In 2019, the BitPay wallet program announced the introduction of
stablecoin payments for traders and consumers around the world. Some crypto
ATMs, such as Instacoin in Canada, support cashing out of the most popular
stablecoins in selected locations.

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