It's clear that cryptocurrencies are gradually making inroads into the global economy, moving closer to mass adoption. Digital currency offers a number of benefits including promoting trust, and usefulness, lower commissions and fees and of course, the potential for profits. and making transactions easier for users to make at a very low cost. Everyone around the globe can transmit currency nearly anywhere, nearly instantly to nearly anywhere.
Sending money across borders through classic financial institutions currently involves long wait times and large fees, while at the same time, senders and receivers are involved are entered in an extremely complicated procedure requiring all kinds of red tape. Depending on where money is sent throughout the world, senders can face anywhere between 10 and 30% in fees to get their money across the globe including network fees, transaction fees, conversion rates....basically, everyone gets a cut when you send money the traditional method. The big financial players have had a monopolized centralized system in place for hundreds of years because they lacked competition.
Buyers and sellers who send these transactions bear the brunt and frustration and red-tape involved in these transactions, jumping through all the rings and hoops of fire and spending an arm and a leg to make deals across the world. The end result being more revenue lost and sellers passing on these fees to their customers, increasing cost. Digital currency is here to upset the apple cart.
While cryptocurrencies have been gaining increasing attention from merchants around the world, there are still a number of roadblocks for wider implementation, including price volatility, constraints on scalability, and others. Instability in price is the greatest obstacle preventing companies from using more cryptocurrencies in their day to day transactions. Moreover, significant coins such as Bitcoin and Ethereum current problems of scalability, resulting in increased processing times. A retailer, who has to process transactions on a regular basis, are unable to perform their commerce correctly if transactions were stuck for long periods of time. In addition, converting cryptocurrencies into fiat through the banks and other economic agents they generally operate with is highly difficult for adopters. Digital currency can potentially offer solutions to all of these issues.
A stablecoin is a digital currency whose purpose is to remain stable relative to the price of another asset and re the price of another asset and always be equal, to nearly equal of the other asset. Most are attached to the U.S. dollar. Big assets such as the Tether, Gemini Dollar, TUSD and others are currently the biggest names, but their are new coins hot on their trail now to upset their current monopoly and apple cart.
Unlike other freely digital coins, stable cryptocurrencies require each unit to be backed by a fiat currency or collateralized assets, one example, Tether, fixes the price of tether on a one for one basis. This makes them fall somewhere in-between cryptocurrencies and standard fiat currency. While Tether is currently the largest stablecoin, their are many controversies and activities that surround it. The one that sticks out the most is that Tether doesn't store the assets it says are tied to Tether. They plan on auditing the account but this in itself promotes mistrust and concern from its users.
Stablecoins address instability in markets by promoting a fast, safe eceosphere that buyers and sellers across the world can utilize to cut down transaction costs, sending fees and operating costs while promoting the network. In our previous article, we mention USDQ, and what it hopes to achieve in the stablecoin market. In the wild west of crypto, functionality is triumphing over hype, which will be be better for the market as a whole.
June 15, 2019
David has a passion for cryptography, collectibles and helping people to form their own opinions.