What are Stablecoins?
How do they work?
These are some of the most relevant questions that are asked about Stablecoins, well, let’s look at their origins. The Stablecoins emerged in 2014, gradually entering the cryptographic world, hence Bitshares emerges as the first organization to propose that model offering its own BitUSD tokens (BitUSD is backed by BTS and is the mother cryptocurrency of Bitshares) and BitEUR to ensure its stability.
Let’s start this part with an introduction to stablecoins
It is well known that the value of cryptocurrencies in the market is constantly rising and falling and users who operate in exchange often face inconveniences to send money from one exchange to another, a problem for those who want to keep their investment in cryptocurrencies without depending on the Fiat money, taking into account that in many occasions verification is required and it is forced to share bank data, characteristics that make them unattractive for many common users.
In the case of the difficulty of moving Fiat money, users usually have accounts in several exchanges, but it is noted that NOT all cryptocurrencies operate in all exchanges, and the common mistake of several is to manage several cryptocurrencies in an exchange and sell them for Bitcoin as they estimate that its value will not rise more or that its prices will fall and let the risk be concentrated in a single cryptocurrency subject to the will of volatility being aware that Bitcoin could skyrocket or collapse. This is when we ask ourselves, what would happen if the value of what we sent could remain stable? And here the “stable currencies”.
Given this perspective, the idea of creating cryptocurrencies that maintain a stable price giving rise to the well-known Stablecoins arose, these currencies would accelerate the adoption of cryptocurrencies by users and businesses that seek to merge the best features of fiat currencies and Crypto Actives: globality, decentralization and low volatility.
Stablecoins are cryptocurrencies, tokens or digital assets created with the purpose that their value remains “stable”, their value for which they are backed up does not vary, they maintain this little variability in their market price where they need a backup.
Well, we know that there are several Stablecoins currencies backed by cryptocurrencies such as Bitshares others backed by Bitcoin or Ethereum (Maker) others are backed by physical assets where they use gold as backup and Stablecoins backed by Fiat currencies like Tether and trueUSD, ok let’s see more closely, this is a page in the source (bennettftomlin) where we can look at the differentiated groups of Stablecoins the backed and the non-backed and understand a little more.
To be continued in part-2 about stable coin price