What are Stablecoins?
The turbulent Cryptocurrency market is constantly changing and making progress on a daily basis. Above all, the ups and downs make some users to create, with now the so-called Stablecoins are used. The Cryptocurrency space sees new and exciting developments and advances every day. One particular area that has recently been increasingly exposed is that Stablecoins play an interesting role in decoupling the Blockchain benefit from market volatility, and it is likely that the niche will play a crucial role in the public introduction of Cryptocurrency.
They are stable in nature, and this stability typically comes from the backing of some alternative value. Perhaps the most prominent example of a stablecoin is Tether (USDT), which, of course, maintains a value equal to US$1.
Will they be able to improve the future of Cryptocurrencies?
While Tether is likely the best-known Stablecoin, it’s certainly not the strongest initiative. Of course, the nature of Tether – that is, being printed in increments by Cryptocurrency exchange Bitfinex, sans auditing – has led to much speculation and controversy. While Bitfinex claims that there is one USD in existence for every USDT, the regular Tether minting batches in the hundreds of millions and circulating supply of over 2.5 billion has spawned a widespread belief that the Stablecoin is not to be trusted without an audit.
Regardless, Stablecoins represent a massively important use case in their elimination of volatility. While numerous organizations and industries stand to benefit from Blockchain integration, the massive volatility experienced across Cryptocurrencies makes it difficult for most of them to safely entertain the technology without creating private Blockchains. In eliminating volatility, Stablecoins represent the solution.
While Stablecoins are still in a relatively early stage, the first applications are beginning to gain footing. Canamex Gold Corp. recently launched a gold stablecoin. Canamex, listed as GOLD on the Canadian Stock Exchange, is one of the first globally listed firms to employ an asset-backed Cryptocurrency. The tokens, coined GOLDUSA, are worth 0.005 ounces of gold each. Proceeds from the token sale will be used to fund a gold mining venture in Las Vegas.
Beyond this, decentralized derivatives platform MARKET Protocol is building a smart contract ecosystem that will allow for the tokenization of any asset or commodity. When it goes live, any individual will be capable of digitizing and trading everything from Tesla stocks to corn. Such a future will have massive implications for the way in which trading takes place, as the decentralized platform will potentially be able to accommodate every type of exchange in both the real world and digital marketplaces.
Many people and investors are still reluctant to invest their money in the Crypto Market. An important issue that prevents both private and institutional investors from entering the Cryptocurrency sector is the unsurpassed market volatility across the board. With Stablecoins, individuals and businesses can finally be exposed to the technological revolution of the Cryptocurrency, without being burned by the Volatility on the way. It will be interesting to see exactly how Stablecoins will manifest themselves in applications in the near future.