Why Binance is so committed to stablecoins

Binance stablecoins have been in the news a lot this year, with the exchange making a conscious effort to promote the use of stablecoins on its platform.

What are stablecoins?

Stablecoins offer cryptocurrency users the best of both worlds, providing instant processing and security of payments whilst being volatility-free valuations of fiat currencies.

They were initially created by exchanges in order to provide investors with a stable currency to use as a placeholder to store value between trades. There are now many different stablecoins in existence, much like cryptocurrencies.

There are two major types of stablecoins: centralised and decentralised. Centralised stablecoins are when the supply is controlled by a company or small group of people, such as Tether. Stablecoins are classed as decentralised when the supply is controlled by the market users and transactions, such as MakerDAO.

However, they all have the same end goal: to allow users to quickly change from one crypto to another without losing too much money due to volatility. There are currently more than 170 stablecoins in circulation, according to BitDigest. Many of these are pegged to the US dollar, but there are also a few stablecoins pegged to other fiat currencies or even other commodities such as precious metals.

Stablecoins supported by Binance

The stablecoin space has grown exponentially over the last year. Because of this, Binance has made it its goal to be the number one hotspot for stablecoins. The exchange even launched its own Stablecoin Market to feature a number of different trading pairs.  

The platform currently lists four US dollar-pegged stablecoins:

• PAX (Paxos Standard Token)
• TUSD (TrueUSD)
• USDC (USD Coin)
• USDS (StableUSD)
• USDT (Tether)

These four stablecoins represent the top four stablecoins currently available in terms of market cap. According to Stablecoin Stats, the four projects combined equal a massive market cap of over $2.5 billion.

The benefits of using stablecoins

It is now more common for users to buy cryptocurrencies via stablecoins rather than through a fiat-based exchange.

Stablecoins provide users with a global commerce opportunity. This is an important feature for those living in countries that have unstable monetary systems, such as Venezuela. They are more likely to be exposed to volatility and uncertainty, but local laws prevent them from using non-native currencies, making stablecoins the perfect solution.

They are also a great tool for investors and traders who want to swap and change between different cryptocurrencies without getting caught up in the volatility of cryptocurrencies. Stablecoins also allow traders to keep value against a fiat currency when they are in-between trades.

A positive relationship with stablecoins

Binance is growing its relationship with stablecoins and it is no surprise that it is becoming the number one spot for users to buy and sell with the fiat currency-backed assets.

All stablecoins listed on Binance are backed by the US dollar on a 1:1 basis. This allows users to have certainty and trust in the conversion rate. Binance also provides minimal to no fees when users convert their US dollars to stablecoins and back. Exchanges that deal with fiat often charge much bigger fees for withdrawals into dollars than Binance does.

Binance understands that transferring stablecoins between different exchanges is faster, cheaper, and more traceable than transferring volatile cryptocurrencies. Because of this, the exchange does not charge a deposit fee for stablecoin transactions, saving users a lot of money compared to other methods of buying crypto with US dollars.

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