How Stablecoins Are Redefining Cryptocurrencies?

Today, cryptocurrencies are synonymous with price fluctuations. This makes them a poor store of value and many view them as alternatives to the stock market. However, this perception is quickly changing with the introduction of Stablecoins.

What is Stablecoin?

A stablecoin is a cryptocurrency that is pegged against real-world assets such as bullion or fiat currency or managed by computer algorithms. This gives the coin a “stable” price while also enabling them to harness the underlying benefits of cryptocurrencies.

How does it work?

Broadly speaking, there are two types of stablecoins - 1) algorithmic and 2) reserve-backed.

Algorithmic: Here, the coin uses a programmed script to manage the supply-demand of the coin and in turn, stabilize its price. For instance, when the demand for the coin rises, the script will increase the supply by minting new coins to secure the price. Likewise, when the demand falls, the script will automatically cut the supply to ensure that the coin’s price does not erode.
Reserve-backed: As the name suggests, this type of stablecoins are pledged against real-world assets such as gold, fiat currency, and even other cryptocurrencies!

What are the advantages of Stablecoins?


Apart from promising a steady exchange rate, stablecoins have other benefits:


  • Users can access to a currency that is mobile, immutable and secure.
  • One can execute anonymous transactions in a fraction of a second and at very low fees.
  • Unlike cryptocurrencies, stablecoins do not lose value in a volatile manner, thus making them a very good store of value.

With the presence of several cryptocurrency development firms, building a stablecoin todayhttps://www.blockchainappfactory.com/stable-coin-development#utm_source=Blogger&utm_medium=Blog&utm_campaign=vignesh is not a hassle anymore. Blockchain App Factory is a top company that offers end-to-end solutions that are white label and highly customizable. They have years of experience in cryptocurrency and blockchain development and house a phenomenal team that can help you launch your projects in no time.

Comments

Post a Comment

Popular posts from this blog

Smithing Down The Gold-Backed Cryptocurrencies

Image
Cryptocurrencies can be considered both Peter Pans and Jack’s beanstalks of the world of technology. They seem to keep the curiosity, they never grow old, and at the same time, they grow bigger and bigger with every passing day! In all of these, cryptocurrencies – and many digital currencies for that matter – have grown without any backing of physical assets. While this growth might be deemed as a great advantage by people who want to reap Return on Investments, the lack of physical backing for the cryptocurrencies is a cause of alarm for many financial experts. Any cryptocurrency that is backed by a physical asset or anything of stable value will surely be considered a welcome move by both finance and technology. This is where the relevance and awesomeness of gold-backed cryptocurrency come in. Defining Gold-Backed Cryptocurrency As the name implies, gold-backed cryptocurrencies are digital currencies that are backed by the value of gold. This type of currencies bring...
Read more

Everything You Need To Know About A Stablecoin

Today, cryptocurrencies are synonymous with uncertainty. A factor propagating this belief is their highly volatile prices. Take, for example, the case of Bitcoin. This digital tender launched by the enigmatic Satoshi Nakamoto is notorious for its very fickle rates that change without any prior intimidation. This is very notable in the bull run the Bitcoin experienced during 2017 where the price went from $900 to an astounding $20,000. Unfortunately, all was not well as in the following year as the prices crashed to $3000. However, is it possible to feature a cryptocurrency with a steady value?  The answer is yes, and it can be achieved by using stablecoins. A stablecoin is best described as a digital currency which draws its value from real-world assets or other fiat currencies or even a basket of cryptocurrencies. By pledging a currency against real-world assets, for instance, gold or other bullion helps “stabilize” its price. This is because these assets have an assured value...
Read more