Daily Bulletin

Money

  • Written by Anna Melnikova
Let's face it what actually prevents crypto from becoming an actual means of exchange and storing money is the volatility of the digital assets. Some users manage to turn it to their advantage, but for most, it is inconvenient. Cryptocurrency cannot be used as a means of payment, medium of exchange if its value is unpredictable and changes twice in a month.



Let's face it what actually prevents crypto from becoming an actual means of exchange and storing money is the volatility of the digital assets. Some users manage to turn it to their advantage, but for most, it is inconvenient. Cryptocurrency cannot be used as a means of payment, medium of exchange if its value is unpredictable and changes twice in a month.  Price swings scare away the critical mass of investors, remaining the thing for risk-takers. Conversely, stablecoins, as it said in their name, combine the stability of fiat with all the advantages of crypto. Here is the quick primer on stablecoins and the perspectives that are hidden behind the asset.    

How can crypto be stable?

Stable coins rely on actual fiat currencies, thus keeping its value relative to the money it stands for. This characteristic doesn't make them inherently stable but is based on the stabilities fiat boasts owing to the economic and political factors. 

Had stable coins been merely a replication of fiat there would be no need in stablecoins. For the first thing, is the perks and benefits of cryptocurrency without the volatility. Second is the opportunity of the decentralized access; one can easily use US dollars even if he has no bank account.

From the investment perspective, stable coins serve as a medium of locking in the gains the investor can gain from rapid upsurges in BTC rate, as it used to happen in the second half of 2017.

As of the beginning of the summer of 2019, only 30% of the stablecoins ever released continue to exist. At the same time, most of the "surviving" cryptocurrencies are provided with the US dollar. Today stablecoins, such as Tether, are most often used by crypto traders to solve the problem with volatility. However, they also open up many other possibilities for use when cryptocurrency volatility is less desirable (for example, smart insurance). Stablecoins can serve as an alternative means of saving or a measure of value. In short, stablecoins represent a segment of the cryptocurrency industry, whose potential market for applications is estimated at several trillion dollars.

What awaits stablecoin next?

The period of 2019-2020 is predicted to become a momentous transition to the economy of "stable coins," which the most notable stablecoin projects yet to be launched, including Facebook' Libra. It is the view of Blockd researchers that the primary mission of stablecoins on the market, call the solution to the problem of the high volatility of cryptocurrencies. According to estimates, the volatility of digital assets per day can reach 5% - 160%.

The researchers indicate these features as the fundamental flaws of stablecoins:  high level of centralization, regulatory complexity, a certain level of volatility (here it means the volatility in contrast to the fluctuations in the prices of the corresponding assets ), as well as difficulties associated with the work of counterparties.

These shortcomings deter crypto users today from using stablecoins. This position cannot be called entirely unjustified, since stablecoins are still a good idea, but are not ready for implementation in everyday life due to insufficiently reliable application.

Presumably, all of the above shortcomings can be solved in the nearest future, as there are already operational ecosystems tackling these critical issues.  #TraceChain network allows providing unprecedented speed and decentralization. The transaction speed under three seconds brings in the convenience. However, this vast number of transactions per second has even more significant benefit. High bandwidth keeps the cost of transaction low owing to it has adequate resources to process more transactions. Thus if compared to regular Blockchain transaction cost is considerably lower on #TraceChain network. The project is among the first to fully implement the idea of decentralization.

As announced recently, the further development of #MetaContracts, the new non-ERC-20 smart contracts which are much faster, cheaper, and more accessible than anything else in blockchain now, is in full swing. Soon the option of releasing stablecoins and tokens on #MetaHash network will become available.

So who knows, perhaps a reliable stablecoin, recognized by both the crypto community and the traditional economy, will be able to become a rival to Bitcoin in everyday circulation, because, unlike it, it will be supported not only by the advantages of blockchain technologies but also by its real value.


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