Binance CEO Changpeng Zhao (CZ) has discussed the popularity of stablecoins and more importantly, how these digital assets are shaping up as a true contender to FIAT currencies.
Taking to social media, CZ talked about how there was a relationship between stablecoins and investors’ trust in the sector.
He argued that if investors were looking to withdraw from the cryptocurrency sector, they would no doubt begin by shedding their stablecoin assets.
CoinMarketCap already puts the value of stablecoins such as USDT and USDC, along with Binance USD, at $138bn, an impressive figure that gives CZ the grounds for his argument.
The stablecoin market has improved and despite the crash of Terra Luna, and the subsequent market doldrums, there is still a lot riding on stablecoins today. Criticism has floated both ways as to whether stablecoins are actually a smart choice.
Central banks such as the European Central Bank and the US Federal Reserve have raised concerns over them, not so much as unreliable, but over whether these currencies are able to overcome some of the traditional challenges such as speed of transaction.
While stablecoins are not issued by a central banking body, they share the same qualities as the original they are based on.
They are said to have a 1:1 valuation to that of a FIAT currency they are paired off with. So, Terra USD, for example, is based on the US dollar.
There has also been some criticism that even USDT and USDC are not “stable” as such, as they still fluctuate when compared head-to-head with the currency they are based off of.
CZ has not mounted an overly-fond defense of stablecoins, but his terse statement is the latest beacon of hope for crypto investors who are looking to remain in the sector.
Stablecoins offer no big returns, however, unlike currencies that swing rapidly up – but often down, too.
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