The White Company launched ‘stablecoins,’ a hybrid of blockchain and fiat money which is claimed to be more stabilized and is potential enough to protect its balance sheet from fluctuation. Price volatility is the most significant issue because of which the traditional cryptocurrencies tend to float freely in the fluctuating crypto market. But in the year 2018, Stablecoins have proved as a delight to crypto traders because of its low volatility.
What is Stablecoin?
It is a new blockchain enabled hybrid of fiat and cryptocurrency which is characterized to be stable towards real word assets. For example, a user can buy one Stablecoin for a dollar, and he can also redeem it in future at the same price. It helps traders streamline their payments via automation ensuring liquidity, transparency, and security. The total investments of Stablecoins as of November has touched $3 billion according to a crypto research group.
According to Tory Reiss (Co-founder & head of partnerships @ Stablecoins) said: “Real-world value and real-world use cases will drive the next wave of the crypto market,” Reiss said that the market tends to be categorized into three types:
1. Algorithmic Stablecoins: shift supplies to optimize the price with the dollar.
2. Crypto-backed Stablecoins: curb price fluctuation in traditional cryptocurrency.
3. Fiat-backed Stablecoins: the value of token depends on currencies like euros or dollars.
Stablecoins referred to an ideal tool that connects the internet & infinite blockchain ecosystems with traditional economies.
Stablecoin industry became popular post crypto crash in 2018 wherein leading cryptocurrencies like Bitcoin and Ethereum (ETH) saw a loss of 80-90%of their capitalization. Most of the crypto investors decided to exchange their volatile crypto assets with Stablecoins as a part of their risk management strategy. They can easily redeem their Stablecoins with any digital currencies or fiat currencies to exit the market once volatility settles on minimized losses.
Global Adoption Of Stablecoins
Almost every crypto investor verifies that their firms have sufficient assets to back them after investing in Stablecoin market. This is the reason why all traditional industries would want to integrate a stablecoin solution. Facebook, the social media giant, has announced to introduce a Stablecoin to enable p2p payments on Whatsapp messenger. In September, Winklevoss Twins launched a stablecoin for their Gemini bitcoin exchange.
These days ‘Stablecoin’ is a megatrend in the crypto market. So the future of money might belong to Stablecoins instead of cryptocurrencies.