As Naira devaluation continues to affect the wallets of locals, many crypto fans are jumping on the stablecoin bandwagon. Now more than ever, the value of Naira to dollars today as compared to the value in early 2020 all the way to 2015, is boosting this move. Making the move even easier is the elimination of wild volatility, as seen in Bitcoin and other crypto-assets.
Stablecoins enjoy a one-to-one ratio. For Nigerians, this means stablecoin prices are pegged to a certain ratio with the U.S. dollar. For example, purchasing a stablecoin of the value of $2 will still be valid later on for the same price. I.e. inflation does not affect the value. Furthermore, stablecoin is safe as it is typically regulated by a trusted body, while BUSD is regulated by the New York State Department of Financial Services.
When Binance USD (BUSD) was created in September 2019, in collaboration with Paxos, we set out to provide a stablecoin that would work as a trusted stablecoin within the Binance ecosystem. The New York State Department of Financial Services (NYDFS) approved our stablecoin upon launch, and we introduced trading pairs for BUSD against BTC, BNB, and XRP. BUSD was available for 1:1 purchase on the Paxos platform and subjected to regular audits to make sure that reserves and issuances were indeed 1:1.
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Becoming a major source of liquidity in cryptocurrency markets, Nigerians use stablecoin to purchase other types of cryptocurrencies on exchanges which do not accept fiat currencies. As other cryptocurrencies and fiat currencies (like the naira) experience hefty price swings, stablecoin are used to keep funds at a firm rate, keeping people’s savings secure in value. Examples of stablecoin include Tether (USDT), USD Coin (USDC) and Binance USD (BUSD) – all available on Binance.com. On the cryptocurrency exchange, BUSD and other stablecoin can be bought, traded and used to earn interest on savings.
In the not too far future, Nigerians will be able to use stablecoin for cost-effective financial transactions whether in the form of remittances, loans, payments and wire transfers. Fortunately for locals, using crypto stablecoin will allow for much easier, cheaper and faster transactions.
According to an article published on the Wall Street Journal, “For traders and investors, however, Stablecoins address a problem that plagues many popular crypto exchanges around the world—the exchanges don’t have relationships with banks, meaning investors can’t use dollars, euros or other government-backed currency to buy the cryptocurrencies they want to trade. So to purchase cryptocurrencies, traders often buy stablecoins with dollars on an exchange that has a relationship with a bank and then transfer the Stablecoins to the exchange where they want to trade. Similarly, traders often can’t sell cryptocurrencies for dollars, so they sell into stablecoin instead. As a result, many exchanges use stablecoin as trading pairs, not dollars.”
With the recent popularity of stablecoin, thanks to its stability, minimized risk, liquidity, regular audits and its regulatory status and added protection, Nigerians are truly benefiting from this cryptocurrency. Other benefits of buying into stablecoins include: every fiat currency is susceptible to inflation; its borderless feature makes payment effortless, convenient and reduces transaction fees to a very low level; its accessible to all generations, including tech-savvy Nigerian youths; has no central authority which could breach payment; more leading brands are taking advantage of cryptocurrency which means digital users in Nigeria and the world at large have access to more local and global well-known brands.
Basically, the cryptocurrency market and stablecoin is growing. Trade with the largest crypto exchange by trade volume, and to enjoy all the benefits that come with trading with Binance Spot, and stable coins, https://www.binance.com/ng is your plug.
