The Stablecoin Quiz
Learn more about stablecoins and some of the benefits of Saver Token.
True or False? Stablecoins can be used to on-board from fiat into crypto-currencies. They can also be used for crypto-currency trading.
True. Traders use stablecoins to convert their fiat into crypto-currency and as a hedge against crypto-currency price falls.
True or False? Stablecoins are being used as a currency in countries with high inflation.
True.
True or False? Stablecoins are designed to hold a stable value.
False. Stablecoins are linked to depreciating assets. For example, because of their peg to the US dollar stablecoins like Tether, True USD, USD coin, Paxos, Gemini, Dai, BitUSD or sUSD loose on average 33% of their value every 10 years.
True or False? Stablecoins help avoid the risks of the fiat financial system.
False. Most stablecoins are tied into the financial system because of their need for bank accounts, centralised companies running the coin and are regulated by legislators.
True or False? I can always redeem my stablecoin for fiat.
False. Even though most stablecoins are designed to be backed with redeemable assets such as US dollars, in practise all have clauses that enable them to stop redemptions at any time. For example Tether stopped redemptions in 2018 when it lost its banking relationship.
If I could list the risks of owning a stablecoin they would include: counterparty risk, systemic risk, regulatory risk and operational risk.
True. Counterparty risk: the failure of the person on the other side of, or executing, the trade. In the case of stablecoins counterparties include the issuing organisation, their bankers and trust companies. Systemic risk: The risk of the financial system collapsing. Regulatory risk: changes to or violation of laws in jurisdictions where the token operates. Operational risk: a wide range of factors involved in the operation of the coin such as fraud or corruption by the issuer, hacking the blockchain, loss of key people. For more information see: https://medium.com/@simonpaige/ready-to-de-risk-your-stablecoins-395f5cd6418
True or False? Tushar Jain, Managing Partner Multicoin Capital said stablecoins “trade volatility for blow-up risk. ”
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