Once you understand what a stablecoin is and how it works, the next step is to see how it is used in practice. Unlike cryptocurrencies whose prices can change significantly, stablecoins are designed so that their value is linked to a specific asset, most commonly the US dollar.
This is why they are used when you want to hold or transfer value in digital form without direct exposure to the price movements of Bitcoin or other cryptocurrencies.
What are stablecoins used for?
A stablecoin can have different uses, depending on what you want to do with your funds.
Storing value
One of the most common uses is holding funds in a stablecoin instead of a cryptocurrency whose price fluctuates significantly.
For example, if you hold funds in Bitcoin and want to reduce your exposure to changes in its price, you can exchange it for a stablecoin.
Sending and receiving money
Stablecoins allow digital assets to be transferred between users and wallets.
To send a stablecoin, you need the recipient’s address and you must make sure that you are using the correct network. An error in the address or network selection can cause problems with the transaction.
Exchanging for other cryptocurrencies
A stablecoin is often used as an intermediary between different cryptocurrencies.
For example, you can exchange Bitcoin for a stablecoin and then use that stablecoin to purchase another digital asset.
Using stablecoins for international transactions
Stablecoins can be used to transfer value between users in different countries without the transaction itself having to be carried out in a traditional currency.
However, how these transactions can be used and whether they are available depends on the platform, network and applicable regulations.
How to send a stablecoin?
If you want to send a stablecoin to another user, you need to:
- have the stablecoin in your account or wallet
- enter the recipient’s address
- select the correct network
- enter the amount
- check all the details
- confirm the transaction.
Before sending, pay particular attention to the address and network. With digital asset transactions, mistakes are not the same as an incorrectly sent payment through the traditional banking system and often cannot be easily reversed.
How to receive a stablecoin?
To receive a stablecoin, you need to provide the other party with your wallet address for the appropriate network.
Before someone sends you funds, check whether your wallet or platform supports that specific stablecoin and the network through which it will be sent.
Are all stablecoins the same?
No.
Stablecoins differ in how they maintain their value, the assets that support them and the rules that apply to them.
That is why, before using one, you should check which stablecoin you are using, what supports it and which network it operates on.
If you want to understand the basics first, read “What are stablecoins and how do they work?”, and then you can also read “What is a crypto wallet and how does it work?” to understand where digital assets are stored and how you access them.
Stablecoins in practice
A stablecoin is primarily a tool for digitally transferring and managing value. You can use it to hold funds, send and receive them, and exchange between different forms of digital assets.
Before every transaction, check the asset, network, address and fees. This helps you avoid the most common mistakes when using a stablecoin for the first time.
Want to use a stablecoin?
Open your Crypto12 account and easily buy a stablecoin directly through the platform.