What you need to know about stable coins

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Credits: Getty Royalty Free

The film, Spiderman gave us a fundamental reference point – with great power, he arrives at the great responsibility, but in the world of digital money, I have my school of thought with great volatility, involves great risks for investments . Although it is not news when it comes to financial investments, some find that this "hype" investment is somewhat exciting, however, for those investors who are fiscally prudent, this is not the type of risk to invest in.

Use of time as an & # 39; tool Not As A Crutch

It would seem that cryptocurrency as a whole, thrives on market volatility, right? Responding affirmatively and in defense Even in its early stages of development, cryptocurrency still has a long way to go before it is fully and stabilized, the debate on regulation (or its lack) is nothing short of reductive but in my opinion time is its biggest opponent.

In recent months, we have begun to see congressional discussions on the issue of regulation, which has demonstrated a number of positive and negative aspects. But the only important thing is that the doors have just opened and we can not be idle waiting for the light to illuminate the space. Therefore, attention should be focused on understanding how these digital funds can be stabilized (where appropriate) and how stabilization can actually harmonize the value of these currencies.

To do so, it is of utmost importance to explore the concept of "stable coins" and & nbsp; their functionality. Users should be confident in doing daily transactions, and only by fully adopting this technology can they relieve the worry of having to cross-reference their purchases and market volatility. If you are already discussing this, take a look at what happened with the value of Bitcoin in in the last few weeks .

The "Holy Grail of Criptovaluta"

The stable coins are often referred to as "holy grail" of cryptocurrency Pixabay / edited by Andrew Rossow

Stable coins are often referred to as " santo graal "of cryptocurrency. But why? User control and minimized volatility. This has the ability to not only influence digital currencies, but currencies from around the world. Imagine having a stable exchange rate across the board. You no longer have to worry about falls or price changes when you travel. Even Indiana Jones could not turn a blind eye to this 21st century treasure.

N. 1 – What are the "stable coins?"

In its smallest form, a "stable currency" is a cryptocurrency that has a [19659016] Stable characteristic of prices . & nbsp; Its value is & nbsp; anchored to or tied to another stable resource, such as gold or the US dollar. Its appeal comes from its extremely low volatility and independence from any central bank. Having a currency that is completely separate and separate from the fiat is changing the game and what is believed to be the future of digital money. Imagine having infinite use of digital money & nbsp; always and everywhere. & Nbsp; & nbsp;

However, despite its glamorous attributes, the cryptocurrency space is still flooded by a multitude of projects that are not ready for large-scale use, or even implementation. Very often, white paper companies are pushing out are nothing short of fancy words on fancy paper, with nothing but the ink that wrote it, "support" it up.

# 2 – & nbsp; Understand the guarantee Behind The Coin & nbsp;

While on his face, a stable coin may seem simple enough, there is more behind it than its name. In understanding its functionality in the market, it is important to recognize the three necessary forms: & nbsp; fiat-collateralized, crypto-collateralized and non-collateralized.

Fiat Collateralized Stable Coins

Ideally, the easiest way to create and use a stable currency is to look at a central entity. A stable "fiat-collateralized" currency is a currency that directly represents assets held in a reserve account by a central entity. Here, the collateral warranty of & nbsp; that currency or token by fiat currency is what guarantees its exchange rate 1: 1. In other words, every coin or token is guaranteed by an equal amount of that fiat currency, which is held by a financial institution.

Why does this matter? & Nbsp; Holding that coin or token, the holder is then able to redeem his currency at any time for that stable value or amount, which is referred to in fiat. & nbsp; The most popular example is Tether . With a 1: 1 conversion rate, it is 100% supported by the fiat currency

Scalability and regulation

Yet, despite this percentage of 1: 1 conversations, there are still those who question on the validity of currencies stable from a regulatory context. If you look at this type of currency from the point of view of scalability, if you look at this type of currency, you could argue that having a fiat currency sitting idle on a bank account is a significant waste of capital.

But, at the end of the day, these coins are still evolving and becoming more and more popular.

Non-collateralized stable coins

Similar to stable currencies, "stable non-collateralised currencies" are not backed by collateral. Instead, price stability is achieved through a technique and a concept devised by Robert Sams seigniorage actions . & Nbsp; A " seigniorage " is the revenue that the government earns when the money it creates is worth more than it costs to produce. This is often used for portions of financing of its expenses without having to levy taxes.

Similar to what central banks already do with fiat currencies, seigniorage aims to do the same, only in a decentralized way. Using smart contract technology, the algorithm is designed to allow the smart contract to increase and / or reduce the availability of available money. Ultimately, this ensures that the value of money remains as close as possible to the value of the anchored asset (fiat).

Using this technology, the smart contract will know when a currency is trading too high or too low. If the currency is trading too high, the smart contract executes its algorithm, issuing multiple tokens to increase the available supply. As a result, the value of money will decrease. But if seigniorage is too low, making it almost impossible to buy enough tokens to increase the value to an appropriate level, future actions can be assigned to a holder, ensuring a " future seigniorage "or excess profits.

Crypto Collateralized Stable Coins

Finally, the third form of these coins may have the aim of achieving price stability in a completely decentralized ecosystem. With " crypto-collateralized " stable coins, you can forget about the fiat. Unlike fiat-collateralized currencies, these types of coins depend on the reserves of another cryptocurrency .

By putting the hat at the disposal of those on the fence, this type of currency is worrying because the value depends on the reserves of a cryptocurrency that, in itself, may not yet be stabilized, on the reserves of another which could also be equally unstable. What you have is a (potentially) unstable currency supported by another (potentially) unstable currency.

In the refutation, however, these coins are often "over-guaranteed" to take into account price fluctuations, leaving excess reserves the event has a significant decline in value

An example, previously provided by CoinTelegraph, makes it easier to understand. & nbsp; If you were to issue a stable $ 1 USD currency, you would deposit $ 2 of the collateral coin. At the end of the day, you would have a stable currency that is guaranteed at 200%, creating a room for maneuver in the (most likely) event in which the collateral would have to lose value.

Let's admit it & nbsp; enough, I'm not completely sold on this kind of stable currency, because the realistic fear of speculation seems to drive this particular category. As a millennium that is still building its investment portfolio, the potential for capital loss is significant with this type of currency. No doubt it's exciting, but what I see here is more money out of pocket to justify (predictable) dips for evaluation, without knowing the approximate percentage of those drops.

# 3 -Why are we looking for the Holy Grail of Crypto? & # 39;

Often referred to as the " holy grail of the cryptocurrency " stable coins seem the perfect solution for achieving decentralization. But, why are they so saints?

Forget the offer and the question. Unlike traditional cryptocurrencies stable currencies are interested in reaching a fixed price. & Nbsp; "Stable currencies are trying to find the balance in not being dependent on a central bank, while ensuring price stability," he said [19659057] Brigitte Luginbuhl CEO of SwissRealCoin in a previous interview with Forbes .

What & # 39; s On My Radar?

& nbsp; In addition to some of the more [19659043] known stable notes such as Tether, TrueUSD, Carbon and Maker, I wanted to take a closer look at how startups use stable, if not entirely, coins.

& nbsp; The White Built on the stellar blockchain the White Standard is the first stable coin to be built off the stellar blockchain. Compared to other protocols, the stellar blockchain has larger and faster transaction capabilities, offering lower costs and more consistent scalability. Specifically, it facilitates cross-value transfers, including payments. & Nbsp; The information giant, IBM, recently launched its blockchain-based financial solution, IBM Blockchain World Wire on the Stellar blockchain.

My interest in the White Company project, however, comes from a legal and regulatory perspective. I first heard about the company when it made headlines this summer in the revolutionary cryptocurrency fraud suit where it was announced that she was the only known case in which a private actor was able to obtain a judgment for fraud with cryptocurrency assets. The lawsuit also demonstrated how individuals and societies, collectively, were able to locate and execute a judgment on the return of the stolen encryption in question, without legal assistance.

The white standard is regularly checked and supported by the US dollar, in a 1: 1 trading relationship. Believing in a truly transparent network, the company provides a daily ticker on its website, & nbsp; show how much of & nbsp; his White Standard token was released all day, every day. When it comes to auditing and reporting, this was very tempting.

Turning to an angle of compliance, the project team is well founded. In support of the project there is lamborghini trader and founder of the company, Elizabeth White. White has worked with luxury brands all over the world, including Formula 1 and McLaren Automotive for over twelve years. Among the managed transactions there are offers for Super Bowl suites, yachts, honeymoons, luxury items and engagement rings.

"We can quickly convert someone's positions at any time," says White. "I can take these large sums of money and buy items for my client, and then reuse their cryptocurrencies in the background."

The CFO, Dr. Edgar Radjabli has over fifteen years experience in professional trading and holds a Futures Series 3 License from the United States Commodity Futures Trading Commission (" CFTC ") and the National Futures Association (NFA), also having served as a financial advisor for various technology companies.

The Illusion of Stability

& nbsp; I asked White about his opinions on some of the stable currencies on the market, like Tether. He told me that many of these coins use algorithms to ensure stability, creating "the illusion of stability".

"A stable currency is really equal to $ 1 USD when you can" cash out "as much as you want, when you want," White said. "That's why we publish a daily balance on the deposit and each month is controlled by a third party, so users know that we have reserves to honor their refund requests by converting their native tokens into Fiat, when they want. "

Millennials

As a millennial lawyer, I was flooded by White's litigation, but I also wanted to know how companies like yours continue to use the financial behavior of our demographic to help you dive deeper into space. According to White, millennials and younger investors are leading the charge in today's cryptic revolution.

"If you look at reports out there, it makes sense that digital natives cling to digital currencies, so it's critical for companies to get ahead of the curve and embrace this new technology by capturing these new consumers."

MILE

In & nbsp; my previous writings I indicated how I traveled the world, exploring how other countries, such as Asia, use technology with respect to our economic structure. Accompanying my desire to travel, & nbsp; the structure behind the exchanges of Asian cryptocurrencies attracted my attention. Here is where I came across MILE. & Nbsp; Blockchain entrepreneur and founder of the blockchain expert chamber in the Russian Parliament, George Goognin was looking for algorithms that would help to fix what he thought was the source behind our economic collapse. He discovered Lotus Mile, the mysterious mind behind MILE .

According to Mile, the answer to the resolution of the economic burdens of unstable exchange rates and uncontrolled issuance of legal funds has been global collaboration on the issue of money. MILE's built-in resistance mechanisms, such as noise filtering, social responsibility and self-generated money generation, are leading to the exchange of Asian cryptocurrencies in its corridors. I'm interested in seeing how it continues to develop in the Asian market.

BitCNY

Another stable coin I found is also extremely popular in Asia – BitCNY . Having traded and traded the Chinese yuan during my travels, I found it fascinating that this particular coin was anchored to the yuan. According to the developers of the coin the demand for its use came from the desire of the community to have a currency that protected them from the risk of their own market. Specifically, this was the reply to the Chinese government that repressed the trade in cryptocurrencies, forcing traders to turn to the BitCNY currency as the main currency for the purchase of Bitcoin and other cryptocurrencies. In my next trips, I'll be curious to see how this is used when it comes to bartering and buying by consumers.

Do not Always Believe the Hype

For investors and traders, these coins provide protection in the event of a market crash, without the haste to have to transfer the capital into fiat coins. But at the end of the day, due diligence is everything. It is important to ensure that the issuing company is not surrounded by disputes. It is no different to look for where to invest your money for any other investment portfolio you may have.

But it remains to be seen whether these coins will continue to be labeled as the "Holy Grail" of cryptocurrency. Only time will tell.

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Credit: Getty Royalty Free

The film, Spiderman gave us a milestone of wisdom – with great power, comes a great responsibility in the world of digital money, I have my school of thought with great volatility, comes a great investment risk .This is nothing new when it comes to financial investments some believe that this investment "hype" is somewhat exciting, however, for those investors who are fiscally prudent, this is not the type of risk to invest in.

Use of time as an "instrument", not as a Crutch

It would seem that the cryptocurrency as a whole, thrives on the volatility of the market, right? answer affirmatively and in defense Even in its early stages of development, cryptocurrency still has a long way to go before it is completely stabilized to regulation (or its lack) is nothing short of problematic, bu in my opinion, time is his biggest opponent.

In recent months, we have begun to see congressional discussions on the issue of regulation, which has shown a number of positive and negative aspects. But the only important thing is that the doors have just opened and we can not be idle waiting for the light to illuminate the space. Therefore, attention should be focused on understanding how these digital funds can be stabilized (where appropriate) and how stabilization can actually harmonize the value of these currencies.

To do this, it is of utmost importance to explore the concept of "stable coins" and their functionality. Users should be confident in doing day-to-day transactions, and only by fully adopting this technology can they relieve the worry of having to cross-reference their purchases against market volatility. If you are already discussing this, take a look at what happened with the value of Bitcoin over the past few weeks.

The "Holy Grail of Criptovaluta"

The stable coins are often referred to as "sacred". cryptocurrency grail Pixabay / edited by Andrew Rossow

Stable currencies are often referred to as the "holy grail" of cryptocurrency, but why? User control and minimized volatility. only to influence the digital currencies, but the currencies of the whole world Imagine having a stable exchange rate across the board.You no longer have to worry about falls or price changes when you're traveling, even Indiana Jones could not turn a blind eye to this 21st century treasure.

N. 1 – What are the "stable coins?"

In its smallest form, a "stable currency" is a cryptocurrency that has a Feature stable at prices its value is pegged to or tied to another stable asset, such as gold or the US dollar, its appeal comes from its extremely low volatility and independence from any central bank A currency that is completely separate and separate from Fiat is changing the game and what is believed to be the future of digital money. Imagine having infinite use of digital money anytime, anywhere.

However, despite its glamorous attributes, the cryptocurrency space is still flooded by a multitude of projects that are not ready for large-scale use, or even for implementation. Most of the time, white paper companies are pushing out are nothing short of fancy words on fancy paper, with nothing but the ink that wrote it, "leaning it".

# 2 – Understanding the collateral behind the coin

On its face, a stable coin may seem simple enough, there is more behind it than its name. Understanding its functionality in the market, it is important to recognize the three forms it takes: fiat-collateralized, crypto-collateralized and non-collateralized.

Fiat-Collateralized Stable Coins

Ideally, the most direct way to create and use a stable currency is to look at a central entity. A stable "fiat-collateralised" currency is a currency that directly represents assets held in a reserve account by a central entity. Here, collateral security of that coin or token by fiat currency is what guarantees its exchange rate 1: 1. In other words, every coin or token is guaranteed by an equal amount of that fiat currency, which is held by a financial institution.

Why does this matter? Holding this coin or token, the holder is then able to redeem his currency at any time for that value or stable amount, which is called in fiat. The most popular example is Tether . With a 1: 1 conversion rate, it is 100% supported by the fiat currency.

Scalability and regulation

Yet despite this percentage of 1: 1 conversations, there are still those who question the validity of currencies stable from a regulatory environment. If you look at this type of currency from the point of view of scalability, if you look at this type of currency, you could argue that having a fiat currency sitting idle on a bank account is a significant waste of capital.

But, at the end of the day, these coins are still evolving and becoming more and more popular.

Non-collateralized stable coins

Similar to fiat coins, "unsecured" stable currencies are not backed by collateral. Instead, price stability is achieved through a technique and a concept devised by Robert Sams parts of seigniorage . A " seigniorage " is a gain that the government gains when the money it creates is more expensive than it costs to produce. This is often used for financial portions of its expenses without having to levy taxes.

Similar to what central banks already do with fiat currencies, seigniorage aims to do the same, only in a decentralized way. Using smart contract technology, the algorithm is designed to allow the smart contract to increase and / or reduce the availability of available money. Ultimately, this ensures that the value of money remains as close as possible to the value of the anchored asset (fiat).

Using this technology, the smart contract will know when a currency is trading too high or too low. If the currency is trading too high, the smart contract executes its algorithm, issuing multiple tokens to increase the available supply. As a result, the value of money will decrease. But if seigniorage is too low, making it almost impossible to buy enough tokens to increase the value to an appropriate level, future actions may be assigned to a holder, ensuring a " future seigniorage "or excess profits.

Crypto Collateralized Stable Coins

Finally, the third form of these coins may have the aim of achieving price stability in a completely decentralized ecosystem. With " crypto-collateralized " stable coins, you can forget about the fiat. Unlike fiat-collateralized currencies, these types of coins depend on the reserves of another cryptocurrency .

By putting the hat at the disposal of those on the fence, this type of currency is worrying because the value depends on the reserves of a cryptocurrency that, in itself, may not yet be stabilized, on the reserves of another which could also be equally unstable. What you have is a (potentially) unstable currency supported by another (potentially) unstable currency.

In refutation, however, these currencies are often "over-guaranteed" to take account of price fluctuations, leaving excess reserves in the event that there is a significant decline in value

An example, previously provided by CoinTelegraph, makes this easier to understand. If you were to issue a stable $ 1 USD currency, you would deposit $ 2 of the collateral coin. At the end of the day, you would have a stable currency that is guaranteed at 200%, creating a room for maneuver in the (most likely) event in which the collateral would have to lose value.

Enough, I am not completely sold this kind of stable currency, as the realistic fear of speculation seems to drive this particular category. As a millennium that is still building its investment portfolio, the potential for capital loss is significant with this type of currency. No doubt it's exciting, but what I see here is more money out of pocket to justify (predictable) dips for evaluation, without knowing the approximate percentage of those drops.

# 3 -Why are we looking for the Holy Grail of Crypto? "

Often referred to as the" Holy Grail of the cryptocurrency, "stable coins seem the perfect solution for achieving decentralization, but why are they so santi?

Forget Supply and demand: Unlike traditional cryptocurrencies stable currencies are interested in reaching a fixed price. "Stable currencies are trying to find the right balance between not being dependent on a central bank and ensuring price stability ", said Brigitte Luginbuhl CEO of SwissRealCoin in an interview previous to Forbes .

What & # 39; s On My Radar?

Besides some of the more known stable coins out there like Tether, TrueUSD, Carbon and Maker, I wanted to take a closer look at how startups are using stable coins, if not at all. [19659005] The stable coin White Standard of the white coin

Built on the stellar blockchain, the White Standard is the first stable coin to be built off the stellar blockchain. Compared to other protocols, the stellar blockchain has larger and faster transaction capabilities, offering lower costs and more consistent scalability. Specifically, it facilitates cross-value transfers, including payments. The computer giant, IBM, recently launched its blockchain-based financial solution, IBM Blockchain World Wire, on the stellar blockchain.

My interest in the White Company project, however, comes from a legal and regulatory point of view. The first time I heard about the company when it made headlines at the beginning of last week, the anti-fascist White cryptocurrency, where it was announced that it was the only known case in which a private plaintiff was able to obtain a judgment for fraud with cryptocurrency assets. The lawsuit also demonstrated how individuals and societies, collectively, were able to locate and execute a judgment on the return of the stolen encryption in question, without legal assistance.

The white standard is regularly checked and supported by the US dollar, in a trading relationship 1: 1. Believing in a truly transparent network, the company provides a daily ticker on its website, which shows how much of its White Standard token was released all day, every day. When it comes to auditing and reporting, this was very tempting.

Turning to an angle of compliance, the project team is well founded. Supporting the project is lamborghini trader and founder of the company, Elizabeth White. White has worked with luxury brands all over the world, including Formula 1 and McLaren Automotive for over twelve years. Tra le transazioni gestite ci sono offerte per suite Super Bowl, yacht, viaggi di nozze, articoli di lusso e anelli di fidanzamento.

"Siamo in grado di convertire rapidamente le partecipazioni di qualcuno in qualsiasi momento", afferma White. "Posso prendere queste grosse somme di denaro e acquistare gli oggetti per il mio cliente, e poi riutilizzare le loro criptovalute nel fondo."

The CFO, Dr. Edgar Radjabli ha oltre quindici anni di esperienza nel trading professionale e detiene una Licenza Futures Series 3 dalla Commodity Futures Trading Commission ("CFTC") e National Futures Association (NFA), avendo anche servito come consulente finanziario per diversi società di tecnologia.

The Illusion of Stability

Ho chiesto a White le sue opinioni su alcune delle monete stabili sul mercato, come Tether. Mi ha detto che molte di queste monete usano algoritmi per garantire la stabilità, creando "l&#39;illusione della stabilità".

"Una moneta stabile è veramente uguale a $ 1 USD quando puoi incassare quanto vuoi, ogni volta che vuoi ", Ha detto White. "Ecco perché pubblichiamo un saldo giornaliero sul deposito e ogni mese viene controllato da una terza parte, quindi gli utenti sanno che abbiamo le riserve per onorare le loro richieste di rimborso, convertendo i loro token nativi in ​​fiat, quando vogliono."

Millennials

Come avvocato millenario, sono stato inondato dal contenzioso di White, ma volevo anche sapere come aziende come la sua, continuano a utilizzare i comportamenti finanziari dei nostri demografici per aiutare a immergersi più a fondo lo spazio. Secondo White, i millennial e gli investitori più giovani stanno guidando la carica nella rivoluzione criptica di oggi.

"Se guardi ai rapporti là fuori, ha senso che i nativi digitali si aggrappino alle valute digitali, quindi è fondamentale per le aziende ottenere avanti alla curva e abbracciare questa nuova tecnologia, catturando questi nuovi consumatori. "

MILE

Nei miei precedenti scritti, ho indicato come ho viaggiato per il mondo, esplorando come altri paesi , come l&#39;Asia, utilizzano la tecnologia rispetto alla nostra struttura economica. Accompagnando la mia voglia di viaggiare, la struttura dietro gli scambi di criptovalute asiatiche attirò la mia attenzione. Ecco dove mi sono imbattuto in MILE. L&#39;imprenditore blockchain e fondatore della camera degli esperti blockchain del parlamento russo, George Goognin, stava cercando algoritmi che aiutassero a risolvere ciò che riteneva essere la fonte del nostro collasso economico. He discovered Lotus Mile, the mysterious mind behind MILE.

According to Mile, the answer to solving the economic burdens of unstable exchange rates and uncontrolled issuances of fiat monies was global collaboration on money issuance. MILE&#39;s built-in resistance mechanisms, such as noise-filtering, social responsibility, and self-printing currency generation, are leading Asian cryptocurrency exchanges down its hallways. I&#39;m interested to see how this continues to develop in the Asian market.

BitCNY

Another stable coin I came across is also extremely popular in Asia –BitCNY. Having bartered and traded with the Chinese Yuan during my travels, I found it fascinating that this particular coin was pegged to the Yuan. According to the coin’s developers, the demand for its use came from the community’s desire to have a coin that protects them from their own market’s risk. Specifically, this was in response to the Chinese government cracking down on cryptocurrency exchanges, forcing traders to turn to BitCNY coin as their primary currency for buying Bitcoin and other cryptocurrencies. In my upcoming travels, I will be curious to see how this is utilized when it comes to consumer bartering and shopping.

Don’t Always Believe The Hype

For investors and traders, these coins provide protection in the event of a market crash, without the rush of having to transfer capital back into fiat currencies. But, at the end of the day, due diligence is everything. It’s important to make sure that the issuing company isn’t surrounded by controversy. It’s no different than researching where to invest your money for any other investment portfolio you may have.

But, it remains to be seen on whether these coins will continue to be labeled as the “holy grail” of cryptocurrency. Only time will tell.

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