Despite the active crypto winter and bear trends preventing cryptocurrencies from taking a spike that would take them to previous highs or at least move the prices away from lows, a type of digital assets, called stablecoins, are trending.
Perhaps the crypto winter itself combined with the crisis that 2018 brought to the cryptocurrency market conditioned the rising popularity of crypto assets pegged by fiat values, such as gold or currencies like the US dollar and EUR.
Can stablecoins stabilize the already sinking market by inserting a dose of stability into the cryptocurrency scene?
Are Stablecoins Synonyms for Economic Stability?
It’s not only the cryptocurrencies that are suffering from frequent price declines as fiat currency is reporting destabilization as well, with the US dollar losing nearly half of its value in the course of the last three decades.
Stablecoins with over 120 emerging projects where digital assets are made to be backed with fiat values such as gold or fiat currency as in the case with Tether (USDT) are said too be able to mitigate the price volatility to at least some level of extent, while the global economy is suffering from inflation and value drops.
Perhaps the most promising stablecoins would be those backed by gold reserves, however, Tether (USDT) have showcased a flattering level of stability since it was created, rarely following bear trends of the cryptocurrency market, that way inserting stability and serving as a medium for transferring value across blockchain.
Still, with the declining value of the US dollar and the trade wars between the US, China and several other countries, more viable solutions are emerging in the crypto scene.
Anchor project, for instance, is set to be pegged to a proprietary index, all based on proprietary algorithm where financial data is being gathered and calculated from over 190 different countries.
This model could be one of the best examples of how stablecoins can provide a certain dose of stability, given the fact that unlike the declining cryptocurrencies and fiat currencies, GDP (Gross Domestic Product) has shown a healthy dose of stability in the long run.