Law Firm specialized in Stablecoins

One of the main drawbacks of using cryptocurrencies is their extreme volatility. At the end of the day, bitcoins y ethers are nothing more than strings of ones and zeros, stored in a distributed manner in thousands of nodes, which have been granted the status of means of payment by a large community of users.

stablecoins stable currencies

Bitcoin is not backed by any commodity (as was the case with Western currencies during the gold standard era), there is no central institution that stabilizes its value and there are hardly any countries in the world that consider it legal tender. For this reason, since 2012 (date of the appearance of the Mastercoin protocol), various digital assets have been developed in the different blockchains digital assets, created for the purpose of serving as a means of payment, which have mechanisms to stabilize their own value. These virtual assets are called stable currencies(stablecoins), and are often linked to fiat currencies by a fixed exchange rate. The absence (at least in theory) of volatility is the reason why more and more payments in the technology sector are being made through stablecoins. Currently, of the five most important cryptocurrencies in the world in terms of capitalization, two of them, Tether and USD Coin (or USDC) - linked to the dollar by a 1:1 exchange rate - are stable currencies.

However, often the stability of value promised to investors deteriorates or collapses outright, as the notorious Terra death spiral, which took place in the spring of 2022, demonstrated. In addition, on other occasions the fiat or commodity reserves that stablecoin promoters claimed to own had not been properly audited. These and other circumstances mean that the world of stablecoins can at times be somewhat slippery and even dangerous. 

For this reason, at Vicox Legal we offer our clients our long experience in the use of stable currencies, as well as extensive technical knowledge on the operation of the main currencies.

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