What Are Stablecoins? And How to Protect Your Money from Market Volatility

When people think of cryptocurrencies, the crazy chart immediately comes to mind. A skyrocketing rise today, and a sudden drop tomorrow.

This volatility is the number one reason why many hesitate to enter this world, fearing for their savings.

But what if we told you there is a type of digital currency that gives you all the advantages of crypto (speed, ease, and decentralization), but without that price drama? Stablecoins.

It’s a safe haven and a bridge connecting the traditional economy to the digital one.

In this article, we will simply explain what are stablecoins, how they maintain their value, and why they are considered the most important tool for anyone wanting to protect their money or use it for daily payments.

What Are Stablecoins?

Stablecoins are digital currencies (crypto) designed to have a fixed price that does not change. Their value is usually pegged to a real fiat currency, most notably the US Dollar.

In other words:

• 1 Bitcoin = Might equal $90,000 today, and $85,000 tomorrow (Volatile).
• 1 Stablecoin (like USDT) = Always equals 1 US Dollar (Stable).

To go back to basics, review our previous article: What is Cryptocurrency and How Does it Work?

How Do Stablecoins Maintain Their Price?

How do we guarantee that this coin will remain worth one dollar? The most famous and secure type of these coins (Fiat-Backed) works on the “Vault Principle.”

For every digital coin issued on the internet, the issuing company keeps a real dollar (or equivalent safe assets) in real bank vaults.

For example, If the company Tether issues one million USDT coins, it must have one million dollars in the bank as a cover for them. This gives people the confidence that they can exchange their digital coins for real dollars at any time.

What Are the Most Popular Stablecoins Today?

There are many stablecoins, but the market relies mainly on two giants:

1. Tether (USDT): The most famous and liquid in the world, used in most daily trading.
2. USD Coin (USDC): Considered the most transparent option, as it undergoes very strict financial audits in the United States.

At Kazawallet, we support dealing with these major currencies in multiple ways. Read more about [How to deposit USDT and USDC in Kazawallet

Why Do You Need Stablecoins?

If their value equals the dollar, why don’t we just use the regular dollar? Because stablecoins took the value of the dollar and added other capabilities to it!

1. Protection from Market Volatility

As mentioned earlier, crypto investors use them as a safety station. When the Bitcoin market starts to drop sharply and screens turn red, traders convert their coins to USDT immediately to “lock in” the value of their money, instead of liquidating and withdrawing to a bank (which is a slow and expensive process).

Read more about market strategies in: Best Cryptocurrencies for Investment

2. Speed of Transfer and Low Cost

To transfer $10,000 to a friend in another country via a bank, you might need days and pay high fees. Using USDT, you can send the same amount in seconds at a cost not exceeding a few cents, at any time (even on holidays).

3. A Safe Haven Against Inflation

In many countries suffering from the continuous drop of their local currency, getting “cash” dollars from banks can be a near-impossible or highly restricted task.

Stablecoins (USDT/USDC) have become the alternative. You can convert your money from your local currency to them in minutes via apps like Kazawallet, preserving the value of your hard work from erosion, without needing to stand in exchange bureau lines or submit to complex withdrawal restrictions.

4. A Bank Open 24/7

Traditional banks have working hours, weekends, and public holidays where transfers stop. Stablecoins do not recognize time.

Want to transfer a huge amount to a relative on another continent at dawn on Friday? The amount will arrive in the same minute. There is no “System Down” or “Sorry, we are closed.”

5. Borderless Transfers

To transfer $10,000 via bank (SWIFT), you might need working days, pay fees for the sender, receiver, and intermediary bank, and you might be asked about the “reason for transfer.”

Using USDT, money travels like a WhatsApp message. Fast, direct, at a very negligible cost (a few cents or dollars regardless of the amount), and it recognizes no geographic borders.

6. The Bridge for Payment and Shopping (Kazawallet’s Role)

This is the most important benefit for daily use. Shops do not accept payment in Bitcoin because its price changes every minute.

But Kazawallet with stablecoins solved the problem! On the Kazawallet platform, we rely on stablecoins (like USDT and USDC) to fund your Visa card.

1. Deposit any crypto into Kazawallet.
2. Exchange it to USDT or USDC (or deposit stablecoins directly).
3. Load your Kazawallet Visa Card with it.
4. Use the card to pay!

And with that, you have used the technology of the future to pay at your neighborhood grocery store!

Are Stablecoins Completely Safe?

Although they are stable, the rule says there is no investment without risk. The risk here is not in price change, but in “De-pegging.”

In very rare and historic cases, the value of a stablecoin might drop slightly below $1 for a short period if the market loses confidence in the issuing company.

FAQ

1. Is 1 USDT always equal to $1? 99.9% of the time, yes. Minor fluctuations (less than 1%) may occur due to immediate market trading pressure, but the price quickly stabilizes back to its $1 peg.

2. Which is better: USDT or USDC? Both are excellent choices. USDT leads in global liquidity and widespread acceptance, while USDC is preferred for its high transparency and strict compliance with US regulations. At Kazawallet, we support both to give you full flexibility.

3. How can I buy USDT with my local currency quickly? Through the Kazawallet platform, you can deposit using local payment methods and instantly exchange your balance for USDT in less than a minute at fair rates.

4. Can my stablecoins be stolen or “disappear”? Stablecoins operate on highly secure, encrypted blockchain networks. The only real risk is sharing your account credentials with others. As long as you keep your wallet account secure, your funds are safe.

5. Do I need a USD bank account to own stablecoins? Not at all. This is the beauty of crypto; you can hold “digital dollars” in your wallet app without the need for a traditional international bank account or paying monthly maintenance fees.

6. Can I convert USDT back into real cash? Yes, you can do this via Kazawallet by withdrawing your balance through various available methods or using it directly via your virtual Visa card to shop anywhere that accepts electronic payments.

In Conclusion

When you look at the big picture, you realize that stablecoins are nothing but an upgrade to our entire financial system.

They are the tool that returned to users their right to move their financial value freely, and keep it away from market volatility or the complexities of old banking systems.

It is no longer just about technology; it is about your peace of mind. Knowing that your money is in your digital pocket, ready to move, shop, or save at any moment you decide, not the bank.