In recent years, attempts have been made to overcome. The obstacle of volatility in the digital currency dimension. It would seem that significant progress has been made with the spread of the stablecoin. Cryptocurrencies such as Bitcoin, although it is a crypto asset that has managed to conquer the cryptocurrency market. Is characterized by very high volatility and this is why it should be considered a speculative asset rather than a means of exchange. Despite this, blockchain technology has made, and is still making, enormous progress towards. The creation of a crypto asset that can be used as a means of exchange for the purchase of goods “pegged” to an official currency. And so the solution could be the stablecoin, a token whose exchange is recorded in a blockchain exactly like bitcoin.
Differs from the latter in one important aspect
Its value is anchored to a real asset or good, making it a Indonesia Phone Number List relatively more stable currency. More specifically, there are three methods to link the value of a token (an asset that only exists in the blockchain) to another asset or physical good. The first anchors the stablecoin to physical collateral. Assuming that a token is worth one dollar (as is actually the case for Tether). Whoever creates the aforementioned asset puts one dollar or the equivalent in low-risk financial securities into a reserve, such as a bank account. Thus the amount, which is equal to the tokens generated, acts as collateral to guarantee its value. A second method involves digital collateral. In this case, for each token created, crypto assets with a value greater than the token are frozen, to prevent high volatility.
The last option instead concerns algorithms
Which maintain parity (even if they do not always succeed), automatically. They create tokens if the respective value in official currency increases, or on the contrary. They Japan WhatsApp Number List destroy them if it decreases. Clearly, the method that makes the stablecoin less volatile is the one that attaches it to physical collateral, and in fact Tether. Which is pegged to the value of the dollar, is the most used stablecoin. This stablecoin can be an excellent example to understand its exact functioning. The purchase and sale of Tether takes place on the market of exchange channels. Which the buying and selling is between private individuals, or through Tether Limit. The company that creates the tokens. In this second case, the tokens are generated. The company upon payment of a quantity of dollars, or, in the opposite case.
