Underlying Asset as a Momentum for Stability and Steady Increase in Price

Cryptocurrency possesses many characteristics of not only a currency but also those of a security. Governments in some countries even regard cryptocurrency solely as a new form of security.

A value of security or stock is often judged by its business value and future value. A business value deals with numerical data like cash, real estate values, revenue, and technical aspects. With high business value, the stock is often called the blue-chip stock as it forms price stability as well as momentum for a steady growth in the overall business value. Contrastingly, if a company has low business value but high stock value, it is simply called a bubble, and it is highly likely to experience steep price fluctuation.

Cryptocurrency is a digital log of transactions. Unlike the established currencies like Bitcoin or Ethereum, newly issued currencies need to build their value only by showing investors their solid future values. In a way, this is similar to stocks with low business value but with high stock value.

Cryptocurrencies following the UAICO model, however, holds not only a high future value but also a high business value stemming from its underlying assets. As a result, the currency is likely to have more price stability and momentum for a steady growth.

In finance, predictability and stability can be measured with cost, and price is often set according to the values of the two factors. Typical examples include insurance loss ratios and security interest rates. In the case of securities, discount rate is mostly determined by the chance of bankruptcy and the rating value of an asset changes accordingly.

In conclusion, UAICO not only guarantees a minimum value of the cryptocurrency through the use of underlying assets but also provides price stability and momentum for its future growth.