Stability silver bullet: Stablecoin
Interfering volatility
Blockchain technology has dramatic rise over the past years. It caused huge rises and falls of coins courses. It definitely provides great opportunities for crypto traders and crypto investors. But such high volatility is inconvenient for payments and remittance purposes. The blockchain itself is a very effective tool for transactions. It doesn’t require any middleman to run. So you can very easily join blockchain ecosystem and start operating within it. In order to solve high volatility issue and make blockchain conception more suitable for payments and remittances were created stablecoin. The main idea of stablecoin is that it provides you with certainty that transferring value will remain the same in future. Some stablecoins like Tether(USDT), TrueUSD (TUSD), USD Coin (USDC) are pegged to a USD. While others may be pegged to other fiat currencies, gold, oil etc.
Mysterious stablecoin
Cryptocurrencies were designed to be decentralised payment tool distancing from traditional valuable assets. In practice it turned out that complete independence from fiat is unattainable. Value and rate of any cryptocurrency is determined primarily by fiat currency, most often the dollar. An obvious conclusion followed: in order to preserve the stability of the cryptocurrency, you need to link it to the dollar. At the same time it became clear that not only dollar can be the key to the stability of cryptocurrency, it can be any traditional valuable asset. Actually any worldwide in-demand product that peggs cryptocurrency makes it stable. So stablecoin is a cryptocurrency that is backed by traditional valuable asset.
Banks in
Though decentralisation of blockchain affords to make transactions across the world without any intermediary who is usually represented by banks, financial institutions pay attention to conception of stabelcoins. JP Morgan is one of the first bank to launch its Stablecoin “JPM Coin” (https://www.jpmorgan.com/global/news/digital-coin-payments). Japanese banking giant Mizuho launched its Yen-pegged stablecoin “J-Coin” in March 2019 (https://www.mizuhobank.com/company/release/20190220release_eng.html ). This financial institutions not just launch stablecoins, they are also going to promote and develop payment services based on their stablecoins. JP Morgan case is particularly interesting because 75 Multinational Banks have joined its stablecoin platform.
Stablecoins become a convenient tool that combines features of blockchain technology and fiat domain. It’s dual nature eases integration of blockchain in common life.
