How to Design a Cryptocurrency with Stablecoins

How to Design a Cryptocurrency with Stablecoins

Everything to Know About Stablecoin in 2020

The primary reasons behind the dawn of Bitcoin were the elimination of middlemen, decreasing time consumption, and transaction cost. Moreover, the advent facilitated benefits such as increased efficiency, accessibility, alongside speed, and several additional benefits.

Initially, Bitcoin was perceived as a mere peer-to-peer currency version to propose smooth payments globally. And while Bitcoin stood up on its set image, it also gave birth to issues like price volatility, thus hindering the reliability and flexibility of the cryptocurrency.

However, Bitcoin has already shown how industries can avail numerous advantages through cryptocurrencies and blockchain in general. Just like every other invention in the history of mankind, the need gave birth to stablecoin. Stablecoin is currently one of the most renowned names in the crypto circle, and the cryptocurrency seems to be leading the industry.

However, despite such stature, the currency is still unknown in some sectors. That is why the web is filled with questions like “what is stablecoin”, “how to use stablecoin”, and “what are the benefits of stablecoin”. The blog here will cover such points and help you know everything about stablecoins in 2020:

What is a Stablecoin?

Stablecoin is another form of cryptocurrency intended to add three basic virtues to a payment, simplicity, security, and scalability. As suggested by the name, stablecoin is an attempt to offer a stable course of crypto payment. However, the stability resonates mostly in the price section of the crypto. Stablecoin facilitates price-stability as it is intended to do.

Taking unwanted risks is something every rational investor avoids, and that is why a major chunk of the industry keeps its distance from the crypto market. Bitcoin being the most renowned cryptocurrencies also lacks the tendency of price-stability, making investors even more cautious.

Thus, we can stablecoin a form of cryptocurrency facilitating stability, security, simplicity, and scalability.

How is Stablecoin “Stable”?

Stablecoins showcase the nature of USD from the 20th century, only in the digital shape. The said USD had the gold standard intact, meaning every dollar was equal to a fixed amount of gold to facilitate price stability.

The secret behind stablecoins’ stability is the same as well. A stablecoin is pegged to real-world assets like real estate, fiat currency, and precious metals in order to avoid any sort of price volatility. Qualities like sustaining market volatility, cost efficiency, transparency, stable parameters, and easy analysis make stablecoin a popular choice.

However, even stablecoin offers different types, and here we have explained them briefly.

Different Types of Stablecoins

Mainly there are three types of stablecoins, collateralized, hybrid, and non-collateralized. Both the categories pack sub-categories of stablecoins:

Collateralized Stablecoins  

  • Fiat-Backed: Stablecoins which are pegged to the fiat currency.

  • Asset-Backed: Stablecoins attached to the value of real-life assets.

  • Crypt-Backed: Stablecoins backed by a cryptocurrency.

Non-Collateralized Stablecoins

Also called algorithmic stablecoins, non-collateralized stablecoins do not stay collateral to anything. Despite being non-collateral to anything, the reliability of people on the practice keeps it stabilized.

Hybrid Stablecoins

Utilizing the best of the above two, hybrid stablecoins facilitate algorithmically and asset association features subsequently.

Why Should You Create a Stablecoin? Benefits of Creating Stablecoins

Here are the top advantages of using stablecoins:

Better Values Storage

As stablecoins aren’t susceptible to sudden inflation, it offers quality value storage.

Quick Transaction

As stablecoins function on a streamlined path, the transactions function quickly.

Less Fee

Standard payment methods have nothing over stablecoins as it offers a reduced transaction fee.

Transparency

Routine audits help stablecoins facilitate transparency throughout its proceedings.

Stability

Stablecoins ooze stability like no other cryptocurrency on the platform.

The Future of Stablecoin

Experts tend to believe that stablecoin has a bright future ahead, and will remain a crucial part of the crypto sphere. As the demand for new exchange mediums is increasing, the usage of stablecoins will increase too.

However, factors like centralization, transparency, and strict regulations might hinder the journey of stablecoins. Although the currency is quite advanced, several tweaks in the liquidity, transparency, and compliance departments can significantly enhance its overall functionality.

How to Create and Launch Stablecoins?

Using stablecoins is not an intricate process, but its creation and launching are. That is why you need to hire professional blockchain help to set up your stablecoin proceedings. Outsourcing the process can help you save valuable time and resources while staying focused on the core functionalities.

Wrapping Up

The blog has shed some light on stablecoins, what it is, what are its type, and how to create them. Read through the blog to get the best beginner’s guide to stablecoins. Learn everything to know about stablecoins in 2020, and follow us to know about similar topics. 

 

Amit Manchanda

About the Author

Lalit Bansal is a founder and CEO of EIY SYS with 14 years of affluent experience in Blockchain, Cryptocurrency, ICO, Digital Marketing, Fintech, and Growth Hacking. An engineer by training and an entrepreneur by profession, his leadership, experience, and connections make him a smart advisor.

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