Stablecoins are presenting exciting opportunities to traders allowing them to tap into volatile emerging market currencies with USD backed stablecoins, say Bitspark.
Almost all crypto transaction nowadays feature stablecoins in one form or the other. These are inherently designed to limit the price volatility associated with the cryptocurrencies by pegging them to a stable asset. Naturally, they act as a store of value in unpredictable market scenario.
Whether it is highly liquid exchanges like Binance or simple OTC desks in mainland China, stablecoins have made their presence felt across the board. Their widespread prevalence can be attributed to the simple fact that they act as a bridge between the crypto and actual fiat currency realm. That being said, not every stablecoin is the same. Primarily, they can be classified into two main types namely trustless and trusted stablecoins, each representing varying counterparty collateral risk.
Trustless stablecoins are the preference since they do away with the need to include a bank, auditor, company, or basically any human interference, in general.
USD enjoys the reserve currency status in today’s markets. That means every major stablecoin is pegged to the United States dollar and this leads to saturation in the market. Subsequently, this limits the opportunity to tap into the remaining 180 fiat currencies of various countries. That’s where Bitspark comes in and open up the next frontier.
As per Bitspark, an ecosystem providing bankless money transfer solutions with roots in Africa and Asia, bank collapses are a normal thing in emerging markets. Trust in governments too isn’t inspiring either. Having access to independent cryptocurrencies which are transparent and accountable can make a huge difference in such an environment. Bitspark delivers such solutions using IDR, PHP pegged stablecoins in far away money exchange agents.
Unique trading opportunities with Stablecoins
Exotic currencies present exciting trading opportunities in combination with stablecoins. Currencies of countries like Iran, Venezuela, turkey, etc. experience volatile depreciation with respect to the USD. Ideally, a trader can short them, place suitable dollar stablecoin as collateral and ultimately selling such currencies for dollars.
There is already a market for such currencies including merchants, Bitcoin traders and individuals. Since the issued currency is devalued over time, the underlying collateral increases in value. This excess collateral can now be withdrawn by the issuer.
Basically, you now have the ability to short the volatile exotic currency without engaging any local custodian – something that is not possible in today’s conventional financial realm.
Bitspark creates many such trustless stablecoins for many currencies in the world. The company aims to increase its base of exotic stablecoins that will help more people in remote locations access a local albeit transparent digital financial system.