Binance, 바이낸스 거래소 한국어 the world’s No. 1 virtual currency futures exchange, announced that it will end its transaction support for USDC, one of the stable coins in the exchange. In addition, we will do the same for other stable coins, USDP (Pax dollars) and TUSD (True USD). Then what’s a stable coin. And let’s take a look at what Binance’s move means.
What is a stable coin?
Upbit and Bithumb, Korea’s virtual currency exchanges, can only invest in the direction of “increasing” the price of “coin” such as Bitcoin after depositing won. For example, if you buy Bitcoin when it’s $20 million and sell it when it’s $20300, you get that much profit.
However, if you use an overseas futures exchange, you can make a bet not only in the case of “rising” prices but also in the direction of “going down.” This is called short selling, or short positioning. So many cryptocurrency investors use foreign exchanges.
However, in order to use an overseas futures exchange, you must first send a “coin” from a Korean exchange to an overseas exchange, not a “won.” The reason is not only that the authorities do not allow the purchase of coins from overseas exchanges with credit cards. This is because both Korean exchanges and overseas futures exchanges are “exchange” rather than “banks,” so you cannot transfer “money” but only “coin.”
At this time, most of them purchase Ripple (XRP) or Tron (TRX) in won, and then send “coin” such as Ripple or Tron to overseas exchanges. If you send a large amount of money, you may lose a lot if the price of the coin itself, such as Ripple or Tron, plunges during the transmission. This is because coins are highly volatile.
You can’t transfer money, but if you transfer coins, you’ll lose money if the price falls, and if you don’t have coins that have little market volatility? It’s the stable coin that was born with this concept.
Most stable coins are designed to be fixed 1:1 with the value of certain assets such as dollars and gold. For example, in the case of the most used USDT of stable coins, it’s fixed to the value of $1 and it’s almost maintained. So when you “transmit” between exchanges, if you buy and transmit stable coins from one of the coins, you can transmit without worrying about falling prices. Of course, because Stablecoin’s fee is expensive, if you don’t send a large amount of money, most of you will use Tron or Ripple with a low fee.
Likewise, stable coins like USDT will act as de facto currencies on the Futures Exchange. Before Stablecoin appeared, most of the time, Bitcoin (BTC) was used as a currency. It was profitable to increase the number of these coins by buying and selling Ethereum or Ripple with Bitcoin. However, at this time, the same concern arises as the remittance.
I worked hard to buy and sell, turn 1 bit coin into 1.1 bit coin, and I fell asleep because if the price of Bitcoin itself goes down, my actual assets could be less valuable than 1 bit coin. However, if you trade with stable coins like USDT in currency, the investor only has to focus on increasing the number of stable coins. The value of the assets themselves is always fixed at $1.
In this way, stable coins play a major role in the growth of the entire cryptocurrency market with the advent.
What does Binance’s move mean?
Currently, stable coin ranks first with USDT (Tether), second with USD coin, third with BUSD (Binance USD), fourth with Dai, fifth with True USD, and sixth with USDP (Pax Dollar).
Binance’s move this time can be seen simply as the company issuing the third-largest stablecoin withdraws second, fifth, and sixth place from its own exchange.
In the future, all transaction support for buying and selling other coins to USDC, USDP, and TUSD will be terminated in Binance, and if you have these stable coins, it will automatically switch to BUSD (Binance USD) on September 29.
In addition, derivatives services such as deposits, defy staking, and liquidity pools marked in USDC will end on the 23rd.
Binance explained that the move is aimed at improving market liquidity so that it can be purchased at the price it wants to buy.
The market sees Binance’s move as a move to strengthen the competitiveness of its issued Stablecoin. In fact, I don’t think it’s a legal problem because it’s business freedom to decide which coins to list and delist on the exchanges we run.
BNB, the world’s No. 1 futures exchange and coin issued by the exchange, ranks fifth in market capitalization, and BUSD, also a coin issued by Binance, ranks sixth in market capitalization. Binance is so powerful that both coins have more market capitalization than Ripple.
Binance recently announced that it plans to sign an MOU with Busan and establish an exchange in Korea. I think we should continue to pay attention to Binance’s move in the future.