Our observations and notes
Stablecoins were created to meet the exigencies of the crypto market.
It facilitates trading in cryptocurrencies by allowing the traders to hold their returns in stablecoins till the next trade thus avoiding the volatility that may ensure in the meantime. It also avoids the necessity to cash out the returns to their bank and back to the exchange for the next trade, which can be very cumbersome, time-consuming and costly too. The same advantages can also be said to apply to a long-term investors.
In fact those stablecoins backed by gold may offer better security than the local fiat currencies, which don't have the same backing in gold.
In terms of interest earning stablecoins some of them offer far better yield than the fiat currencies - again another plus for the stablecoins.
All the above advantages are likely to be chiseled away somewhat with the introduction of CBDCs, which can perform just like stablecoins but may not have the same advantages as gold backed stablecoin or high interest yielding stablecoins.
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Yet some CBDCs are likely to garner more trust than stablecoins among sections of the population merely because they are backed by a government.
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