Crypto industry has experienced pink and blue over the last few years. Especially the year 2017 was a surge, and 2018 has been crashing. The market has grown and contracted within a matter of a month. Despite its growing popularity, some unresolved issues are hampering its potential.
The big problem that the market is facing today is extreme volatility. Many of us will not approve of the idea of losing our hard-earned money suddenly on a questionable market. Despite its benefits traders are reluctant to accept the cryptocurrency because of its uncertain future rates. If the digital currency has to enter the main, it should find stability.
Stablecoins are the most rapidly growing sector of the crypto industry. These currencies have values like real life commodities. Unlike common cryptocurrencies like Bitcoin and Ethereum whose values fluctuates 20% to 30% within a fraction of hour, they are much stable.
Government from different countries have realized the potential stored in Stablecoins and have started to develop their own. Generally, the unit value of these coins are same as USD and have fully collateralized value. Tether is the biggest Stablecoin available in the market presently and is supported by US dollar.
Various other Stablecoins are also available in the market, but a collateral asset does not back many of them. In spite of this, they are stable than traditional cryptocurrencies. They achieve stability by integrating monetary policies of smart contracts. These type of stablecoins are popularly known as algorithmic stablecoins. The underlying algorithm surges or declines the supply of the coin to keep its value close to the hard asset.
Why invest in stablecoins?
Before investing in the traditional crypto market, one has to distinguish between the speculative project and a utility project as the traditional cryptocurrencies have become saturated to get further investments. The reason to invest in stablecoin is, their value is attached to the hard asset, and very few are available in the market, presently.
They have the potential to move the blockchain technology and the cryptocurrency to the mainstream. They can even be used for payment of daily needs, which is presently not possible with traditional digital currencies because of their volatile value. Experts trust that non-volatile cryptocurrencies will encourage the expansion of the crypto market.
They have the potentiality to change the future of the cryptocurrencies and the financial institutions in the near future.