Stablecoins (Crypto) Explained in One Minute: Are Tether (USDT) or Coinbase's USD Coin (USDC) Safe?

Stablecoins such as Tether (USDT) or USD Coin (USDC) that has been launched by Coinbase have appeared because not all crypto exchanges are able to establish banking relationships and it's quite convenient to simply use stablecoins.

However, as this video explains, stablecoins themselves are plagued by the same issues that crypto exchanges faced. In other words, it's difficult to establish solid banking relationships when it comes to any cryptocurrency-related project and a stablecoin does not represent an exception.

As such, a case could be made that the counterparty risk is simply transferred to another entity to a certain degree rather than being eliminated completely.

Does this mean stablecoins should be avoided at all costs?

While in an ideal scenario, yes, stablecoins should be avoided, it would be wise to at least keep your exposure to them to a bare minimum if that is not possible for whatever reason(s).

Don't let the fact that nothing is currently burning give you a false of security. Banks hate stablecoins, legislators hate them as well and as a result, you're skating on very thin ice by using such cryptocurrencies.

This video explains why stablecoins appeared as a crypto type, what they're all about as well as what the main problems that you need to be aware of are.

When crypto prices are on an upward trajectory, investors tend to look the other way and conveniently ignore problems or potential problems that are looming. However, this "strategy" works until it doesn't and when it stops working, it tends to do so in a spectacular manner.

Stablecoins are most definitely one of the most obvious examples of a problem that is extremely serious but tends to be downplayed by people until it's too late. Whether we're talking about downright questionable entities such as Tether with its USDT or more legitimate players such as Coinbase with it's USDC.... prudence is the operative word when it comes to crypto.

Видео Stablecoins (Crypto) Explained in One Minute: Are Tether (USDT) or Coinbase's USD Coin (USDC) Safe? канала One Minute Economics