Binance has unveiled a series of new products and features relating to stablecoins — with the world’s largest cryptocurrency exchange describing these digital assets as “an efficient fiat gateway into crypto.”
Stablecoins are often pegged with a fiat currency, meaning one unit can equate directly to 1 euro or $1. With new coins emerging all the time, the industry is evolving quickly, prompting the company to launch a stablecoin market in which its consumers can benefit from pairings with other cryptocurrencies.
The crypto-only exchange now supports five stablecoins in total: Paxos Standard Token (PAX), TrueUSD (TUSD), USD Coin (USDC), StableUSD (USDS) and Tether (USDT).
As reported by Cointelegraph, Binance CEO Changpeng Zhao has been vocal about his support for stablecoins, as he believes they offer “far more freedom than traditional fiat for users” and help regulators maintain control. In November, the exchange introduced its combined Stablecoin Market, creating a place where a broader range of assets can be used as base pairs.
Binance asserts that “it is now often more efficient to buy cryptocurrency via stablecoins than through a fiat exchange” — not least because of how stablecoins are less susceptible to high transaction fees and market volatility.
The benefits
In explaining the rationale behind using stablecoins, Binance says that it can help eliminate the confusion that all too often swirls around conversion rates. Given how the prices of other coins and tokens can change dramatically in a matter of minutes, this increasingly popular form of cryptocurrency could help deliver the certainty that many everyday consumers want and expect. Over time, it could also enable the industry to build a compelling case for mainstream adoption — addressing some concerns that many digital assets amount to a store of value rather than a currency that can be used for everyday purchases.
The financial plus sides may not end here, either. In a blog post on stablecoins, Binance explained that “there are minimal to no fees when converting US dollars to stablecoins and back.” The exchange explains that this is primarily because these transactions eliminate the cost associated with making wire transfers during the fiat-to-crypto conversion phase. There can also be advantages when cryptocurrencies are being changed back to fiat, as the use of stablecoins can help consumers avoid the higher withdrawal fees often levied by fiat-focused exchanges.
To help crypto enthusiasts make savings, Binance recommends that consumers convert their fiat into stablecoins by using the official websites of the five it supports — all of which have “straightforward, trusted channels” for helping the transactions run smoothly. From there, transfers to its crypto exchange can be “fast and traceable.” For those who then wish to buy the likes of Bitcoin or Ethereum using a stablecoin, Binance says the maximum trading fees associated with such a conversion are just 0.1 percent.
Chasing mainstream adoption
Binance’s move into stablecoins is in reaction to growing interest from the crypto community. Indeed, as reported by Cointelegraph, a study released in February predicted that stablecoins are going to play an instrumental role in the mainstream adoption of this technology — something that has proven elusive so far.
The report forecasts that countries that have suffered from hyperinflation in the past, when fiat currencies suffered devaluation to the extent to which everyday essentials become unaffordable, are the likeliest to embrace stablecoins first. And several nations are currently in the throes of hyperinflation, including Venezuela, Zimbabwe and Angola.
Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.