by Criptan
October 31st 2008, Satoshi Nakamoto gave birth to the first cryptocurrency. That day the first real intangible monetary asset in history was born. Some time later, other Blockchains began to emerge and a world of possibilities opened up in the cryptoverse. A new economic system was born that makes it possible not to depend on centralized entities to participate in the financial world. Thanks to this creation, it is possible to have a digital monetary account without the need to place trust in a third party. In addition, it allows you to send money to another user regardless of their location without having to resort to expensive and/or restrictive conventional methods. These characteristics make cryptocurrencies a very interesting option when it comes to storing and sharing value; however, Bitcoin is far from being the solution to all our problems.
The value of a monetary asset, like that of any asset, whether real or financial, is subject to the laws of supply and demand. The more supply there is of that asset, the less value it will have in proportion to other assets; with demand the reverse effect occurs. A desired quality in any currency is a balance between supply and demand so that its value enjoys a certain stability. The human being is by nature reluctant to uncertainty; If you store value in the form of currency, you want to be sure that in the future the access to goods and services that currency will provide you will be similar to what you had when you acquired it. For this reason, worthwhile financial monetary assets have organizations that adapt the supply of the asset based on its demand in order to preserve its stability (some with greater success than others).
With real monetary assets the matter is a bit more complex because their supply is not centrally controllable. Yes, there are some assets, for example, gold, which quite successfully manage to remain relatively stable thanks to a natural balance of supply in relation to demand. As the demand for gold increases, its mining will be more profitable and therefore its supply will increase. In addition, due to its millennia of history and the certainty of its value, it is rare that its demand suffers great ups and downs. The same does not happen with Bitcoin.
In the first place, it is very difficult to determine its value (and therefore the demand it will have at a certain price) since it depends 100% on decentralized consensus. On the other hand, given its youth, the number of people who demand it for monetary purposes is relatively low compared to that of speculators; Logically, this causes small variations in the value that agents perceive in it to lead to a large variation in their demand. If we add to this an independent supply of this highly variable demand, we find what Bitcoin is today; a currency with great virtues among which stability is not found.
Fortunately, in a world where the Blockchain offers great opportunities for storing and sharing value, but without any currency that offers certainty as to its future value, the market had to offer solutions. In 2014 the first stablecoin was born from the hand of Tether, USDT. It is a digital financial asset, native to the Ethereum Blockchain, whose value is linked to that of the dollar. USDT would become a revolution since it allowed users to enjoy the virtues of the Blockchain at the same time that they could not worry about the volatility of crypto assets that they were used to. The question is how does Tether keep the market value of its cryptocurrency always at $1?
To answer the question you have to understand that it is a financial asset. A financial asset is a collection right against another party; The value of a financial asset is therefore linked to the obligation to which it entitles you. However, logically, discounts are applied to this value for risk of non-payment or waiting for collection. A USDT is an obligation of the Tether society to give you a USD when you claim it. In addition, they claim to keep 1 USD for each USDT they issue, so that they can always meet their obligations (to be exact, it is not a liquid dollar that they keep, but assets of the same value). Therefore, if we can be sure that Tether is going to meet its obligation and that it is going to do so without delay, then we can remove discounts from the equation and the value of the financial asset will be equal to the value of the asset to which it entitles you, that is say, one USD.
Tether has helped a lot to advance the crypto world, however, it violates one of the fundamental virtues of the Blockchain, the absence of the need for trust in a third party. The crypto world had managed to create a fully decentralized digital trading registry; on the contrary, it needed to centralize the issuance of the coins that will participate in it if they wanted it to be stable. Well, at least it was like that before the creation of decentralized stablecoins; in particular DAI, the first cryptocurrency in this category to gain prominence.
DAI is a native token of the Ethereum network that, like USDT, manages to anchor its value to a USD. However, although the result is the same, the means used for it are very different. There is no third party that guarantees any payment in exchange for DAI. The coin is underpinned by a programmed protocol to balance supply based on demand. Its operation is somewhat complex and will be explained in another article; however, it is enough to know that almost 5 years after its issuance, DAI retains its 1:1 indexation (with very low deviations) to the USD.
Stablecoins are currently fully established in the market. Numerous centralized stablecoins have emerged that compete with Tether, such as USDC (Coinbase and Circle). On the other hand, variety has also increased on the decentralized stablecoin side. There are a wide variety of protocols that manage to balance the supply and demand of your currency (not necessarily with the same DAI strategy) and index it to the value of a non-crypto monetary asset. This asset can be the fiduciary currency of a country, gold, or any other asset that developers can think of; the possibilities are endless.
In conclusion, stablecoins are cryptocurrencies that allow the use of the characteristics of the Blockchain without being exposed to the great volatility that traditional assets of this technology suffer. Anyone can easily get stablecoins on the market, whether they are centrally issued like USDT (78 billion in circulation) or decentralized issued like DAI (10 billion in circulation).
Criptan
Criptan is a cryptocurrency trading platform with an integrated custody service that seeks to bring the world of cryptocurrencies closer to people's daily lives, focusing on offering returns and profits on the main cryptocurrencies. It is a Spanish company founded in 2018 by Jorge Soriano, an architect who has worked for years in strategic and creative consulting, with extensive experience of more than six years in the crypto world, and Jaume Sola, linked to the ecosystem for more than 30 years. innovative and technological, which has collaborated since its inception on platforms such as Flywire and other major technological ones.
Both understand cryptocurrencies as a new form of money that has to be accessible to all people. Therefore, they decide to create a platform focused on simple and reliable access that is the gateway for this type of user. To complete the project, Enrique and Pablo Penichet, founders of Bbooster Ventures, joined Manuel Palencia and John Nahm, Managing Director of Strong Ventures.
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