In a decentralized environment, price fluctuation is something that crypto devotees have grown accustomed to. For better understanding, the crypto world is like the pirates in the sea where big ships are always after the small ones to conquer their wealth and treasures. However, crypto fanatics have found a way to end this volatility by introducing stable cryptocurrencies which provide the much-needed shield when the market fluctuations strike.
Primarily, there are three kinds of asset-backed cryptocurrencies, and they involve numerous procedures to ensure that the user funds are not hit adversely due to market fluctuations. Commodity backed, and fiat-backed cryptos and cryptocurrency backed assets are the most common ones in circulation. Let us take a look at a few asset-backed-cryptocurrencies much in use in the crypto world these days.
This gold-backed digital currency is deployed on the blockchain network of Ethereum. 1 DGX amounts for 1 gram of gold and the storage and management are done by the DIGIX group of companies. They ensure that the amount of gold deposited is always equivalent to the amount of DGX tokens that are in circulation.
Gemini USD (GUSD)
The New York Trust Company manages this fiat-backed crypto asset. The company is committed to ensuring that 1:1 balance is always maintained between this crypto asset and the US Dollar. The most distinguishing attribute of Gemini USD is that it combines both online and offline strategies for the minting of new tokens. The smart contracts that generate tokens quickly adopt the security of offline systems but still manage to run with the flexibility offered by the online system.
This is another fiat-backed cryptocurrency that maintains a ratio of 1:1 with US Dollars and also the funds that are in reserve in an escrow bank account. This crypto asset, deployed on Ethereum blockchain, spans more than 100 market platforms.
Undisputed Benefits of Stable Cryptocurrencies for Crypto Supporters
Bitcoin, Ethereum, and even significant altcoins cannot be termed as reliable payment methods when cryptocurrencies began to be adopted globally because of their volatility. This is why crypto supporters came up with stable coins. Suppose you offer a product worth $800 to your customer, but due to a market crash, your income declines by $100. This will seem as if you have been robbed and you will have no control over it.
With the introduction of stable crypto assets, dealers can now transact without any fears of volatility. Many people across the crypto industry believe that if and when the digital currencies will be used for buying items, it would involve the use of stable cryptocurrencies. Crypto dealers also utilize stable coins to ensure that their earned income does not recede by the end of daily trading.
Apart from all this, the stable asset-backed coins like DGX have also enabled the users to hold a portion of few commodities digitally, something that was not feasible in the past owing to the tangibility of gold bullion.
The effect of introducing asset-backed securities in the crypto world has been the onset of stability in an otherwise volatile market. Transactions are highly secure, the fee is easily affordable, and there is a high level of security. Buyers and sellers have the ease of engaging with one another, and there are no unpleasant surprises on account of crypto market crashes. Just like a sea pirate, in the crypto world, it is imperative to be aware of when to take your treasures to the shore to secure them.