Stablecoins Explained
Stablecoins will aid in the adoption and liquidity of crypto assets. Retailers can transact without volatility, and investors can have a stable asset that is pegged to fiat for trading purposes.
Tether has long been criticized as a centralized method of addressing the stablecoin utility. It is vulnerable to central bank confiscation and scrutiny. It also is controlled by a third party and therefore vulnerable to corruption. Tether is not a transparent blockchain where all assets can be accounted for. It's arguably not even a cryptocurrency per se.
The next generation of Stablecoins such as Maker and Terracoin will incorporate Decentralized Autonomous Organizations to ensure the trust machine of blockchain governs the system.
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I do completely understand that it’s not financial advice. I’m accumulating when we drop to 350 bil.lol They basically want to make new decentralized non speculated unregulated stablecoin. Sounds like a good plan. This appreciation value sounds to me like they will actually invest the funds. It sounds to me like hedge fund in cryptocurency, but I could be as well wrong. Anyway, whether I’m wrong or right this is definitely a great concept once he mentioned “you can create stablecoin of any coins”, and that’s what definitely got me. Nice bonus at the end. 10k bitcoins for pizza. I wish I was that pizza guy that day.
lol I bet whoever got those 10,000.00 bitcoins at that time has already sold it, if not lost it or threw it away. There is word that thousands and thousands of bitcoins are actualy lost and will never be recovered. Forget about 21mil bitcoins in circulation.
"Tether is a stablecoin with a 1-to-1 peg against the USD, whereas the conversion rate is 1 Tether USDT equals $1 USD. For every Tether USDT in circulation, $1 USD is added to a centrally managed savings account as a collateral. However, some people doubt that Tether is actually fully collateralized."
Stable coin” is a term used in cryptocurrency to describe cryptocurrencies meant to hold stable values. For example, Tether (USDT) is a blockchain based asset meant to trade for $1 USD. It is a “price-stable cryptocurrency.”
There are a number of stable coins in circulation today, and a number more have been attempted in the past (with varying degrees of success).
Each stable coin has a unique mechanism, but they all generally work the same way. They hold collateral of some type and manage the supply to help incentivize the market to trade the coin for no more or less than $1. For some, like Tether or TrueUSD, the concept is to hold actual dollars in reserve that are redeemable for the token. For others, like Dai, they hold crypto assets in reserve and have a lending system.
copy paste from here
https://medium.com/@argongroup/stablecoins-explained-206466da5e61
Hence the quotation marks.
A useful currency should be a medium of exchange, a unit of account, and a store of value. Cryptocurrencies excel at the first, but as a store of value or unit of account, they’re pretty bad. You cannot be an effective store of value if your price fluctuates by 20% on a normal day.
This is where stablecoins come in. Stablecoins are price-stable cryptocurrencies, meaning the market price of a stablecoin is pegged to another stable asset, like the US dollar.
It might not be obvious why we’d want this.
Why I believe stable coins is really important for the future of crypto currency is because of it's "Stability"
You would agree with me that It’s precisely the volatility and day-to-day price fluctuation that is keeping the masses away and scared of cryptocurrencies.
Imagine if we can assure reluctant people that the value of their money will be stable and safe within the crypto space, so they can enjoy all the benefits from a decentralized and innovative financial system, without all the risks and fears they’ve been hearing about in the media. Everyone can agree stability is important to encourage a wider adoption of cryptocurrencies.
My own thoughts.
Beautiful explanation you also gave @investing
Yeah. Thanks for this explanation my friend.
Did my own little research too and somehow, I've come to realize that The price of most cryptocurrencies is determined by supply and demand in the marketplace.
It fluctuates quite often and sometimes very drastically.
But then, A stablecoin on the other hand, is a cryptocurrency that has a relatively stable price.
Like one of the commentaries i saw, “A stablecoin will relatively have the same buying power tomorrow than it has today”
And I'm hoping that the buying power "increases" rather than remaining stable. Lol
Thanks for this beautiful explanation @investing
My friend would say Stable coins is the "holy grail" in digital currency.
Generally, Cryptocurrencies are well known for their extreme volatility, as it’s not uncommon to see coins like Bitcoin and Ethereum rise or fall by 10-20% in a 24 hour time frame.
Although this level of volatility is beneficial to traders and investors, it also hampers cryptocurrency’s real-world adoption.
I wanna say from a practical perspective, businesses do not want to transact in a currency marked by volatility and risk. It would be really difficult, for example, to pay an employee’s salary in Bitcoin if the purchasing power of his paycheck is constantly in flux.
Volatility would also make it difficult for consumers to make daily transactions using cryptocurrencies.
But then, I believe this stable coins have come to bridge that gap. At least from what I've read and a little investigation too.
I'm hoping it stays that way or improves.
Thank you for your teachings my friend
#TeamHodl
Maker is an amazing project :)
Was not aware off Terracoin will ceck it out.
Just looked into Terracoin ... seems complerly dead :S I now only see Maker as any good
Connor, what do you think, are we going to see another small dump of BTC before the bullrun can finally break the 10k?
I have a feeling that for more healthy growth it kinda has to fall a little bit one more time :(
Traits that will assist the wider adoption of any stable coin are simplicity all along with chic of concept, comfortable integration points for partners, and power for exchange of work with. However, stability is key. Short-term stability is important for transactions and long-term stability is crucial for holding.
The Tether Platform is painstaking to be quite backed if each and every one tethers in spread is fewer than or equate to all of the fiat that is held in the bank account.