A Detailed Dive Into Stablecoins #016

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Hello great minds,

It is a wonderful opportunity to come before you all today to discuss on an issue of great importance in the cryptospace.

I trust you are all doing perfectly fine and are enjoying your activities in the community because as for me, I enjoy my activities in the community.

Today, we shall continue our discussion on a topic we began some time ago, and this topic aims at giving us a detailed knowledge into stablecoins.

Please join me as we begin our explanation on the advantages of fiat currency.

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ADVANTAGES OF FIAT CURRENCY

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Fiat currency is being used to back stablecoin because of it's unique advantages and we shall discuss some of these advantages now.

• MONETARY POLICY:

The monetary policy system is one effective advantage of fiat currency, however there are ways in which monetary policy pose to be an advantage, and we shall examine them today.

LOW STORAGE AND SECURITY COST

Fiat currency unlike commodity money doesn't require security measures or storage cost for it to function properly.

Rather it can be electronically stored and in a way, eliminating the risk of physical degradation or theft.

LOWER BARRIERS TO ENTRY

Fiat currency lowers barriers to entry for it's users and business owners looking to participate in the economy.

Regardless of the financial means of every individual, fiat currency is readily accessible to them.

REDUCED RISK OF DEFLATION

In contrast to commodity based system, where the availability of a given commodity influences it's supply, that is, it's supply is limited by the availability of these resources, fiat currency system decreases the risk of deflation.

Deflation in simple terms is understood to be a sustained decrease in price, which can discourage Investment and spending.

With the use of fiat currency, central banks are able to withstand deflationary measures by increasing the supply of money.

FISCAL POLICY ALLIGNMENT

Fiat currency can be used in allignment with fiscal policy.

Government has the ability to spend, borrow, adjust tax rates to stimulate the economy.

The necessary flexibility to support such policy is being provided by fiat currency.

ECONOMIC GROWTH AND INVESTMENT

The predictability and stability provided by fiat currency supports economic growth and Investment.

Business owners and investors have confidence in the currency they are making use of, that it will retain its value over the years, thus making long term investment more feasible.

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CONCLUSION

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We have examined more advantages of fiat currency and as we proceed, we shall learn more