Cryptocurrencies and increased volatility are almost synonymous. The digital coin market can easily decrease or increase in price by 10% -15% in one day. But along with the unstable currencies in the sector there are also the so-called stablecoins, which will be discussed in this article.
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1. What is the stablecoins?
2. The list of the most famous stablecoins
3. Advantages and disadvantages
4. Further perspectives
The main idea of cryptocurrencies is the creation of an absolutely decentralized payment instrument, which will have no connection with the usual valuable resources. But at this stage of the development of cryptocurrencies it is not possible to completely abandon it fiat yet. In any case, the currency of digital coins is counted in dollars, euros and other legal currencies for convenience.
To spread cryptocurrencies, a bridge must be established between traditional and digital financial sectors. Therefore, in 2015, for the first time, the best qualities of cryptocurrency and legal currency were combined, and so the buildings appeared.
The first stable cryptocurrency was To tie, is still the most popular stable digital currency. Tether is supported by the US dollar. This coin occupies the 8th place in the global Coinmarketcap ranking, with a total capitalization of almost $ 2.5 billion.
But it is worth noting that there are already enough stablecoins on the market. Each of them is strengthened by a certain physical heritage:
- other legal currencies (the euro, the pound sterling, the yen, etc.);
- gold and other precious metals;
- the minerals;
- the property;
It is only at the beginning, since it is already obvious that a digital currency can be anchored to any physical product. Therefore, it is possible to protect as much as possible resources from volatility of cryptocurrencyand at the same time enjoy all the benefits of decentralization.
So, as mentioned before, the first stable USD currency was Tether. Its rate is supported 1: 1 for the US dollar. This project was launched in 2015. Literally one year later, its EURT equivalent EUR was represented to a large audience. After a while, the cryptocurrency of the Japanese yen appeared. As many analysts had suggested, these two coins were not widespread.
At the beginning of 2016, the DigixDAO coin was launched, whose rate was pegged to gold: 1 token equals the cost of 1 gram of gold. It should be noted that there have been many projects, which have tried to put coins in gold (OneGram, GoldMint, HelloGold, AutumCoin, etc.). Silver has not been forgotten either (EthereumLink, Silvercoin, Silver Back Coin, etc.). In Israel, the group of developers released the Stazeco Carat, whose currency, as its name suggests, was linked to diamonds.
As you may have guessed, there is a huge amount of coins on the market, which are somehow supported by physical resources, but let's take a closer look at two more sensational dollars projects.
Gemini Dollar it is the first regulated stable digital currency in the world, which is anchored to the US dollar. This project is still too young and it is not clear how it will show up in the future. Now the coin occupied 1723th place in the global Coinmarketcap ranking.
TrustToken it's another project whose developers want to connect real and digital economy. They themselves estimate it in 256 trillion dollars. Within this platform, the TrueUSD a token was issued, its rate was pegged to the US dollar. Soon developers promise to release tokens, which will be anchored to other popular fiat currencies. On the one hand, this project has many advantages (ability to implement blockchain in real economic sectors, introduction of smart contracts, strong team) and, on the other, there are many disadvantages (lack of roadmap, centralization, possible vulnerabilities of smart contracts, etc.).
First of all, we list the main advantages of stablecoin, there are several:
- Holders of such currencies can use all the benefits of the digital economy and at the same time be relatively calm about the security of their capital. As a rule, cryptocurrency exchanges do not work with legal currencies. And with stablecoin it is possible to trade with the dollar (or any other currency) directly on an exchange. It greatly simplifies a process of buying and selling digital coins.
- So people, who do not trust banks, can secure their capital without contact with traditional financial structures.
- Stablecoins can be effectively used in commerce and business, because their price does not change over time. A seller can safely accept $ 1,000 in equivalent coins, since its value will not decrease, even under conditions of market fluctuations.
Unfortunately, the stablecoins are not without flaws, and now let's take a closer look at them:
- These coins are absolutely useless as an investment. After all, 1,000 coins purchased for $ 1,000 today, cost the same $ 1,000 in a few years (and is, at best, if the project does not close).
- Pegging to the value of a particular physical product does not protect against the fluctuations of the asset itself.
- There is a risk of freezing company reserve accounts, which will make it impossible to fulfill the obligations of token holders.
- Stablecoins can be stolen simultaneously in two ways (digital and physical).
- The storage of a physical asset involves additional expenses, which often fall on the owner's shoulders.
Due to several factors, today stablecoins are just a good concept, which is still far from widespread use. To a large extent, this direction has good prospects in the future. The financial transactions that will be carried out through stable cryptocurrencies will be able to bring the real economy to a qualitatively new level. With their help, bureaucratic procedures can be avoided and, thanks to the technology of the intelligent contract, it will be possible to do without intermediaries.
Stablecoins are digital coins, whose currency is not exposed to greater volatility, because it is anchored to the value of a given physical asset. With these coins it is possible to connect real and digital economy. But at this point, the stablecoins have a series of problems that need to be solved, only then will it be possible to talk about their widespread use.
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