Why invest in stablecoins?

For the context of this question, we examine a subclass of stablecoins, a fiat backed stablecoin like XSGD

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A stablecoin like XSGD in and of itself has little reason to be invested in because it is pegged 1:1 to SGD

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With the frame of reference of investing for potential gains, there is little attraction of stablecoins as compared to other cryptocurrencies

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As StraitsX will always honour that if you return to us units of XSGD, we will allow you to swap it back to the corresponding units of SGD as and when you wish

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In that sense, XSGD is indeed almost like cash - meaning that comparing cryptocurrencies (which serves widely varied purposes) and XSGD (almost like cash) and trying to decide which is better is like comparing apples to oranges, better in what way?

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"Almost" here is an important distinction here so let's use an analogy to help us better understand here

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SGD in a bank is almost like SGD cash in hand, they both represent money and are essentially pegged and yet -

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• For SGD cash in hand, we are limited to being able to transact with those who are physically around us as cash in hand is a physical representation of money
• For SGD in a bank, we could transfer it via PayNow to someone a distance away, we could also use it via a debit / credit / charge card around the world in ways that we wouldn't be able to with SGD cash in hand as SGD in a bank is a digital representation of money

For XSGD, as a blockchain based e-money or stablecoin, it is a web3 / decentralised / blockchain digital representation of money and can be used quite differently from other forms of cash as we know it

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For instance, in another answer here https://seedly.sg/posts/what-is-xsgd-and-how-do..., we explore how XSGD can be used in Decentralised Finance (DeFi) to FX against USDC (USD) in a way that is cheaper and faster than traditionally possible

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To sum it up, from an investing for potential gains point of view, there is little evidence that XSGD can be better or should be compared to most cryptocurrencies out there

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From a usage point of view, as an almost like cash, what should make us attracted to it and feel excited for it are the possibilities (both explored and unexplored) that a blockchain digital reprensentation of money can give rise to such as being able to achieve FX that is cheaper and faster

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And who knows, maybe one day we will get workable smart contract insurances that is self-executing - missed an SIA flight due to bad weather? No questions asked, the smart contract would disburse you XSGD immediately with no human intervention and / or clawback - something that is just not possible with the Internet as we know it today

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As a technologist in this field, it gives me great joy to dream of the possibilities that blockchain enables

The attraction as mentioned is the higher yields. But of course there are much higher yields for other cryptos. But it always comes back to how safe and secure it is.

Tbh I’m not a fan of stable coins 😂 it doesn’t make sense to invest in them as the yields are not that high. Also tether only has 3.87% in cash and mostly in commercial paper. Also you should read the recent news on tether 🥴 they lied and are not trustworthy so stay clear!

Usdc on the other hand is safer with more cash on hand but there are still other risks involved so you have to do your own due diligence

Either way crypto is an emerging market so do take time to examine the market first before you plunge in! No way faster to earn money but easiest way to lose it all at the same time 😦