Stablecoin is an ‘encryption that ensures price stability by interlocking with existing currency or physical assets’.
It often required for the issuance of coins and for the guarantee of value. The reason why stablecoin attracts so much attention is due to the potential of cryptocurrency.
If changes in the market price of cryptocurrency resolved, cryptocurrency will be available when using existing financial services. And overseas remittances can be faster and cheaper.
There are three main types of Stablecoins: Fiat-Collateralized, Crypto-Collateralised, and Non-Collateralized. Apply different principles to keep the currency at a constant price.
Many countries in the world have banned or at least warned Libra, but they still support stable coins. Even though Libra claimed itself as a stable coin, it is far from it.
Stablecoin and cryptocurrency
Legal currency collateral means that a particular company or institution deposits legal currency (ex. dollars, pounds, francs, etc.) in its account and issues a token equivalent to that amount. In many cases, issuing tokens that can be a dollar exchange ratio of 1:1.
How to use, simple. It’s just a stable coin exchange to keep taking it as legal tender and passed to the operating agency. Operation agency is also always password to currency exchange and legal tender in accordance with the fixed exchange rate.
By doing business through the Stablecoin, both buyers and sellers can minimize damage caused by price changes. Even though the price of the Stablecoin fluctuates on the exchange, it is because of its universal value (1USD).
However, since the operating institution voluntarily issues tokens, gives currency, and manages deposits, it does not disclose internal information transparently. If you steal the legal currency that the operating institution has deposited, or if you do not change the policy and exchange the legal currency at a fixed exchange rate, the stable coin becomes a scrap of paper.
