With the invention of Bitcoin, cryptocurrencies have revolutionized the way we think about the financial industry. People are becoming increasingly more aware of and curious about this new phenomenon. Evermore people are dipping their toes into the world of crypto trading, and more and more businesses are taking the rise in popularity of cryptocurrency seriously, and allowing for payments made with Bitcoin, or other cryptocurrencies.
Still, with the rise of interest in the crypto world, many people are still worried about the fluctuating and volatile nature of the crypto market. Though volatility exists in any kind of stock trading, for those worried about the fluctuating prices of cryptocurrencies, a new kind of crypto coin was created. The so-called stablecoin’s goal is to provide the benefits associated with cryptocurrency, as well as retain the stability which most associated with FIAT currency.
Volatility of Cryptocurrency
Bitcoin has dominated the world of cryptocurrency, remaining the most popular since its inception. That being said it, as well as most cryptocurrencies, tend to suffer from high levels of volatility. For example, in a short span of a few months, the price of Bitcoin went from $5,000-6,000 to $19,000 and then declined to $7,000.
A way to combat this short-term volatility is through the use of crypto trading sites, which employ Artificial Intelligence technology to read and predict the wild fluctuations of the crypto market and ensure users can turn a profit. A site that incorporates this kind of technology is Bitcoin Digital, on top of providing a user-friendly interface, safety measures to ensure anonymity and online security, and a small fee, so as to make sure you get the best bang for your buck.
Stablecoin
The short-term volatility of bitcoin makes it difficult for everyday, public use, and the point of currency is to retain stable value over longer periods of time. To this end, a subsection of the cryptocurrency called stablecoin appeared on the crypto market in late 2014.
As stated before, stablecoins offer the advantages often associated with cryptocurrency, such as anonymity, security, tax exemption, and so on. With the added benefit of the stability associated with FIAT currency.
Tether
The first, most famous, successful, and respected stablecoin is called Tether. Originally called RealCoin, the name was changed to Tether in 2014, by the company currently responsible for maintaining its fiat reserves, Tether Ltd. The way Tether Limited maintains the stability of its cryptocurrency is relatively simple.
The Tether Foundation kept one US dollar in reserve for every one unit of Tether issued. This practice kept the price of Tether stabilized at one dollar per unit, and one unit could be redeemed for one of the US dollars being kept in reserve.
Though it started out slow, seeing very little activity in its first year, the stablecoin took off in 2017, with Bitcoin’s incredible spike in price and popularity. Though in 2016, Tether’s supply had passed one million dollars, by the same time next year it had already reached a little under ten million. As Bitcoin’s price kept rising, hitting its peak in 2018, so did Tether, reaching a supply of over one billion dollars.
The future of Tether is a bright one, as it will most likely retain its stability and popularity. A great many experts believe that the value of the cryptocurrency may even rise to $1.2, with some believing it could go to $1.5.
Other Options
Tether may be the first, and best option when it comes to stablecoins, but it isn’t the only one. A google search will yield many results, listing the best of the best stablecoins which prospective investors can look into. Some of these include USD Coin, Paxos Standard, and others. Do your research into stablecoin, find the one that appeals most to you, and get started in the world of cryptocurrency.