An Opportunity with Crypto Today

Imagine you got paid in cryptocurrency by your employer on the last Friday of the month and by the very next Monday, it had dropped 15% in value. Do you think your mortgage lender would care about that when the payment comes due and is short 15%?

Or what if you bought a new Samsung 4k TV with cryptocurrency and a week later the price of your crypto had doubled? You just inadvertently paid twice what you could have just a week later. For example, let’s say someone paid you $1,500 in Bitcoin (BTC) in Sept. 1, 2017… and you were going to use $1,300 of that payment to cover your mortgage by the 20th. Well, you would’ve been in a bit of trouble because BTC dropped 27% during that time, reducing the dollar value of your stake to just $1,096.

This scenario works the other way, too…

What if you’d paid BTC for that TV on Nov 11, 2017? Well, you would’ve been very disappointed. Why? Because two weeks later, you could’ve bought that same TV for about a third that amount of BTC. In those two short weeks, the price of BTC tripled.

The average person fears this type of volatility and it does hinder the real-world adoption of cryptocurrencies. But there is a new type of coin that will solve this dilemma - some are even calling it the “holy grail” of the crypto world.

Once these new types of coins enter the crypto ecosystem, they’ll make it easier to buy, sell, trade, and most importantly, get paid in cryptocurrencies. For cryptocurrencies to reach mass market adoption worldwide and even locally, there needs to be a stable medium of exchange and this is where “stablecoins” come into play.

A stablecoin is a cryptocurrency with a fixed price with the most common pegged to a fiat currency such as the U.S. dollar and trade at or near $1.00 USD. With stablecoins, many new use-cases would emerge for the crypto market. These include payments that are cheaper than those of credit cards (2.87 up to 4.35%), international payments ($15 to $45 per transaction one way) without exchange risk all in seconds as opposed to days it takes today. For example, the Stellar Network can exchange fiat currency across borders internationally using their XLM cryptocurrency for $.0009 USD.

So you can see why some consider stablecoins as the “holy grail” of the crypto ecosystem and the savior of the whole idea of cryptocurrencies and online digital asset exchanges.

There are two broad types of stablecoins; those considered collateralized and those uncollateralized.

Collateralized stablecoins are backed by real-world assets, such as the US Dollar as fiat currencies or Gold as a commodity. Uncollateralized assets are pegged algorithmic computer code called algorithmic stablecoins.

The most popular stablecoins are fiat-backed tokens such as Tether, TrueUSD, and USDCoin currently redeemable for $1.00 USD. So far, no algorithmic stablecoins have gained enough material market share to be considered viable enough to move out of experimental. The Digix Gold Token is a commodity-based asset backed by and redeemable for gold.

However, there are still pros and cons of stablecoins today that must be settled before mass adoption occurs.

Stablecoin Pros:

• They are 100% price-stable
• They are simpler to transact than existing cryptocurrencies
• They are less vulnerable to security hacks because the collateral isn’t held online

Stablecoin Cons:

• They are centralized because there must be an entity you trust to hold the collateral
• Liquidation back to a fiat currency you can bank can be slow and expensive
• These type of assets will be highly regulated
• They will require regular audits to provide the transparency that is more inherent in decentralized models of cryptocurrencies

In other words, although stablecoins maintain a fixed value they are not without risks. Any coin backed by a real-world, off-chain (meaning not online or on a blockchain system) asset faces confiscation by authorities which really defeats the purposed of the decentralized ideals of the original Bitcoin whitepaper. Additionally, like any other asset, custodians could mismanage their clients’ holdings.

We’re still in the early stages of this new and unique technology opportunity and the projects we’re tracking or leading are working on ways to overcome these drawbacks. 

We do believe the growth of stablecoins will trigger and motivate the wider adoption of crypto assets by the average person and worldwide commerce in general. As with everything, the more people participate, the more money is put into the ecosystem, the more commercial users and use cases will emerge for within the crypto market place overall. 

We believe stablecoins will also allow for new revenue opportunities as well. What if we could use a stablecoin to make a yield greater than the bank industry’s dismal yields today? What if we could become a lender on the blockchain generating a nice return in the process?

All of this will be possible with stablecoins. That’s why it’s important for you to understand the stablecoin ecosystem now.

Join us at PalmettoChain.com in our efforts to create a business enviroment that is open and accepting of such opportunities.

GetCranking, DrJ