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The collapse of the cryptocurrency market has led to an increase in the issue of stablecoin. At the moment, there are over 50 stablecoin offered today.
The big question here is how stablecoins are going to do during the coming year. And for many, one of the best ways to evaluate the future is to look at the past.
What is a Stablecoin?
Stablecoins represents a blockchain of collateralised collateral activity that serves as a hedge against the volatility and price decline of the collateral crypt. Generally, stablecoins are supported by assets such as USD and other legal currencies. Sometimes, they are even supported by gold. There is not even a value of appreciation.
Stablecoins can be used to provide greater stability to your portfolio and some even apply them for payments. However, one of the main limiting factors in the proliferation of stablecoin is the speed of the underlying blockchain.
Stablecoins have a cryptographic structure and only have one based on design to satisfy the tokenization and to avoid double shopping or chain rehypothecation. Most stablecoin is centralized.
Stablecoin expansion
A driving force behind the expansion of stablecoin is the lack of trust in Tether, the first stablecoin to be developed. Although Tether was seen as a slow blockchain with few calculation errors, it was also described as a pioneer in the industry. At this moment, however, there seems to be a change. New entrants in the area, such as GUSD, PAX and USDC are next-generation stablecoin designed to improve the stablecoin industry.
Overcome challenges
Resizing is one of the main problems associated with current stablecoin. Most coins are not user-friendly for those who do not understand the underlying structure and prohibit the start and payment speed. It is also difficult to predict which will emerge as the strongest, even with all the competition.
Some are pointing to sidechains as a solution for scaling down payments. The problem is centralization. The ideal point for some would be to reach a point where there are sufficient levels of decentralization and security for maximum transactions.
Differentiation can help
For current and future broadcasters of technologies, differentiation could be the best. To differentiate, it may be better to rely on optimized technologies and service providers that enable fast and economic transactions. Stablecoin does not have the big networks that make the various credit card companies. As a result, they must look for a method for smooth transactions between various technologies and boundaries. During the application of these mechanisms, they must ensure that architecture is fast and safe.
Looking forward
Some are pointing to a stablecoins clearing house, which can promote immediate quasi-fungibility. This could facilitate the fight against money laundering, ensure a system of control and balancing and a more efficient use of stablecoin applications. It will be interesting to see how the 2019 goes.
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