Bitcoin’s volatile value
Everyone was surprised when Bitcoin’s value skyrocketed to almost $20,000 in December 2017. However, just as fast as it went up, the value of Bitcoin eventually went back to down to as low as $3,600 in just a couple of months. To date, Bitcoin is valued at around $7,000 and has been stable at that price range for quite some time now.
This erratic behavior of Bitcoin’s value makes investors skeptical in digital currencies being a sound and stable investment. Bitcoin trading through platforms like Bitcoin Revolution may sound financially beneficial in short term, but forecasting a long-term behavior may be difficult which increases the risks of investment in cryptocurrencies like Bitcoin.
Emergence of stable coins
While this instability in value puts the future of Bitcoin and other cryptocurrencies in an uncertain position, new emerging cryptocurrencies, dubbed “stablecoins”, have started providing solutions in the problem of stability its cryptocurrency predecessors. Where Bitcoin and other popular digital currencies may have failed, stablecoins aim to provide by trying to hold its value more consistently, offering potential investors more stability and less risks.
How stablecoins remain stable
Unlike current currencies, which can only be traded in digital exchange platforms such as Bitcoin revolution, stablecoins aim to make digital currencies more available and flexible in terms of range of usage and acceptance. While most cryptocurrency values depend ultimately on what other people are willing to pay for it, stablecoins aim to have an intrinsic value by being redeemable for something tangible, like a regular currency or gold.
Pros and cons of stablecoins
Most stablecoins available right now have values bound to the US dollar. This have allowed these digital currencies to remain stable while traditional cryptocurrencies suffer in their volatility. The only drawback that might push investors away from stablecoins is the potential for its value to grow tremendously is questionable, and there are investors who are not willing to trade their chance to earn millions for stability and security.