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Stablecoins: Scam or Cryptocurrency Volatility Safehaven?

Nick Chong · April 4, 2018 · 5:00 am

Stablecoins, cryptocurrencies pegged to external values outside of the cryptocurrency market, have been all the talk lately, especially in the recent market pullback. Tether, the biggest stablecoin pegged to the US dollar, has recently come under fire due to a lack of transparency.

Let’s face it, the cryptocurrency market, in general, is far from stable. Over the past 6 months, the market cap of the cryptocurrency space has been a gut-churning rollercoaster ride from one hundred to eight hundred billion dollars and everywhere in between.

Compared to traditional markets, the cryptocurrency market has faced magnitudes more volatility than these traditional markets. On an average day, stock markets often see single percentage movements, while cryptocurrency markets have become used to seeing 3-5 percent movement days. This may be due to the fact that the industry is in its infancy with sentiment being widely varied between different countries and organizations.

Volatility and risk have been found to be the primary reasons why more conservative retail investors still have not dipped their toes into the cryptocurrency market. Traditional markets and their respective investors often try to avoid volatility as a high volatility factor will often damage profits and the security of funds.

As a direct result of this volatility, which has become commonplace in the cryptocurrency market, blockchain developers have begun creating and working with cryptocurrencies that are pegged to values which exist outside the blockchain industry. The main examples being Tether and the DAI token which have both been key players in this newly founded cryptocurrency sub-sector.

Now that the market has learned that $ETH can also go down- and down a bunch, I see a new use case for #StableCoins. $HAV @havven_io @therealbasecoin @FragmentsOrg @MakerDAO should add #ICO functionality which would remove the vol...
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