Bitcoin Buster? The search for a more stable cryptocurrency


  Bitcoin Chart Image copyright
Getty Images

Image title

Bitcoin's price has been extremely volatile in the last 12 months

Cryptocurrencies – digital tokens known as criptos in short – have investors in the grip of gold fever, with billions traded every day. Prices float wildly, making them high risk investments. But could a more stable and less volatile crypt persuade us to think of digital money less as a speculative investment and more like a traditional "smart" currency?

There are more than 1,500 criptos – Bitcoin, Bitcoin Cash, Ethereum, Litecoin to name just a few – have been traded in about 190 exchanges all over the world.

Prices have skyrocketed and have crashed alarmingly. In 2017, the price of a bitcoin rose to nearly $ 15,000 before losing two-thirds of its value in a few months. Currently it is worth about $ 5,000.

This volatility may be a friend of a speculative trader, but it has strengthened the reputation of the criptos as high-risk investments for the "get rich quick" fueled by adrenaline.

Crypto fundraising schemes, known as Initial Coin Offerings, have alarmed regulators around the world.

Media playback is not supported on device

Media caption Carney requires cryptocurrency regulation

the increasing number of encrypted start-ups is developing alternatives known as stablecoins, digital tokens anchored to traditional fiat currencies like the US dollar, the British pound or the Japanese yen, with the goal of reducing this volatility and increasing confidence

Hong Kong- The Tether base has opened a road in this market, trading about $ 2, 7 billion (£ 2.1 billion) of fiat currency in its eponymous digital tokens. He claims to have all his digital cables supported by traditional money in his bank accounts – a claim that has been contested by some.

But Tether's 90% dominance on the stablecoin market is causing many others to try something similar.

For example, the Crypto Circle finance company is launching a new token called USD Coin.

"Imagine a US dollar coin with which you can make payments, use cryptographic networks or use smart contracts to pay dividends, but which you can convert to fiat currency at any time," explains Circle's CEO , Jeremy Allaire.

Circle's currency will work with Ethereum's blockchain – the technology of the distributed registers underlying cryptos – and will have an open standard infrastructure overseen by a body called the Center. He wants the Center to become the main platform for other stablecoin operators.

Copyright of the image
Getty Images

Picture caption

The exchange prices of the cryptocurrencies were extremely volatile

"Crypto represents the next level of Internet infrastructure," he says. "It will allow money to move freely at lightning speed around the world, but also to offer binding and verifiable contracts, allowing anyone to do business together.

" We will see many companies using tokens to increase revenue. And eventually the central banks will want to do it, "says Mr. Allaire.

  • Click here for more news, features and videos of the BBC's cryptocurrency

Circle, which is supported by the likes of Goldman Sachs and Baidu and has an estimated value of about $ 3 billion, recently attracting another $ 110 million investment led by investors such as the Chinese giant of encrypted mining Bitmain.

Kory Hoang is the founder of Stably, a company in Vancouver that is developing StableUSD , another stablecoin supported by the US dollar The Vietnamese entrepreneur believes that the sector presents "a huge opportunity", especially for people in countries with unstable currencies.

Copyright of the image
Getty Images

Picture caption

Will the crypticians ever replace the traditional currencies?

"Fruit vendors in the streets of Zimbabwe could accept digital payment through an app," he says. "Their legal money is almost useless, but they could receive tokens in seconds and sell them easily for a small commission."

Obi Nwosu, founder and CEO of Coinfloor, a cryptic exchange collective, says: "There are about two billion people who are not rented or underestimated, which means they do not have access to the world of -commerce.

"Bitcoin and criptos give these people access to much lower costs, but we admit with less protection."

price stability?

But there is disagreement in the industry on the best way to reduce the volatility of criptos prices.

Coinfloor hopes to solve the problem of volatility by attracting much more money in the sector in the belief that higher trading volumes will lead to a more efficient market.

This will require better regulation, Nwosu, before the big institutions can probably engage in serious sums of money, deception remains an obstacle to mass acceptance, he says

But this is even better and travel the state road, he believes, which requires a central organization to support digital tokens, with the additional cost involved. And this structure is in conflict with the decentralized nature of the criptos and blockchain technology and it could be "the worst of both worlds," he says.

More Technology of Business

"We think that even if stablecoin could be popular in the short term, a decentralized currency that is stable and does not have a central organization behind it will be safer in the long run."

Whatever the disagreement on how to achieve price stability for currency and investment purposes, most people in the industry agree that the additional ability of an encrypted to act as an intelligent contract presents enormous opportunities to "tokenize" the physical goods.

"Let's say I have a house in the center of Saigon worth $ 1 million," says Mr. Hoang. "I could put it into practice and sell those tokens on the global cryptography market: you could issue a billion pieces of your home if you wanted, so people would start trading them, just like the shares of a real estate investment fund.

" offers investors all over the world access to investment opportunities never seen before. "

Akbar Thobani, CEO of the SFOX cryptographic exchange platform, states:" We think that tokenisation resources, such as trucks, cars, airplanes and real estate, become big business. "

But if striptecoin cryptos will become mainstream as legal currencies, will the system be able to cope with volume?

Many fear that the blockchain is becoming slower and risks completely blocking one of the blockchain platforms. more popular, it can process about 13 transactions per second, while the Visa card processing processing platform can cope with more than 20,000 transactions per second.

That's why work is under way to create more fle xible Blockchain-based platforms such as EOS and Stellar, which could cope with a huge increase in transaction volume and millions of users.

  • Follow Technology of Business editor Matthew Wall on Twitter and Facebook
  • Click here to learn more about business technology

[ad_2]Source link