Stablecoins: Cryptocurrency Trends to Keep an Eye On

Stablecoins The Blockchain technology has been described as one of the most epochal inventions the world has ever witnessed. Despite the decline in price that this industry has witnessed especially in the last few weeks, the Cryptocurrencies have still shown a rapid growth as the leading consumer products and technological assets.

The month of February and even March will be some of the most important months for these virtual currencies. This is because market analysts, investors, and other people are waiting to see how these cryptos will rebind and continue to grow in these rather hard economic times.

Stablecoins are definitely one of the Cryptocurrency trends that should be keenly watched. This is due to the breakthrough that they have made in the market over the last few months.

To those who might be unacquainted with Stablecoins, these are basically Cryptocurrency assets that are created to help in reducing the volatility that most virtual currencies are facing. Because they hold their values for a very long period, they become the best tools that can protect investors’ portfolio in the huge swing in the market.

Since the virtual currencies help in several financial uses, the employment of one its much-awaited applications is yet to be seen. One of the initially planned utilization of the Blockchain technology was its application as a digital currency. It was envisioned that this new trend would assist in transacting not only efficient but also secure payments. However, the rate of volatility that is currently witnessed in the market could not allow this to be achieved.

The alarming levels of volatility have reduced a number of tokens to an unreliable source of storing values that can be used in commerce and day-to-day transactions. This is one thing that the Stablecoins are here to do away with completely. But the narrative can only be changed when the value of the tokens are pinned to another active asset like the fiat currency.

At the moment, the largest Stablecoin is Tether. As an established Stablecoin, it assists in gaging Tether’s value to the US’ main currency; the dollar. This is done by holding the dollar {USD} in private and then providing some extra Tethers. It is then swapped back and forth as would be appropriate.

But despite all that care, Tether has recently encountered several critics demanding for a serious scrutiny to its operations. These follow potential concerns that have been raised concerning its legitimacy and transparency.

One thing that the advocates of Stablecoin have appeared to be much interested in is a substitute technique that can be used for maintaining the consistent value of tokens. This can only be possible on a Blockchain technology that is completely trustless. The Stablecoin method works by backing each of the tokens with an equal decentralized virtual currency asset. It therefore mainly depends on smart contracts as opposed to being held in a vault or a private account, as that’s the only means it can hold ancillary. Over-collateralizing currency seems to be working right for this system, as it can easily provide price stability. This takes place without affecting the much-needed transparency thus creating an opportunity for brand new possibilities in Stablecoin as much progress is made in this sector.