Cryptocurrencies date way back to 2009, after Satoshi introduced Bitcoin. Today, thousands of cryptocurrencies exist. However, they have not achieved mainstream adoption and utilization, which can be attributed to a set of drawbacks such as price volatility, regulations, cybersecurity issues, and scalability.
Stablecoins have emerged ever since, to resolve the volatility and stability problems of traditional cryptocurrencies. Currently, there are over 200 stablecoins in existence, including Tether(USDT), TrueUSD, and most recently, SameUSD. SameUSD pegs to a bundle of stablecoins, ensuring insulation against shocks to a particular currency, commodity, or entity.
Reasons for the invention of Stablecoins
Stablecoins are cryptocurrencies that are collateralized by the value of the underlying asset. They come as digital money and aim to simulate fiat currencies that are more stable than cryptos. Stablecoins are not vulnerable to the extreme price volatility experienced by traditional cryptocurrencies.
The collaterals vary from coin to coin. Some have their prices pegged on fiat currencies like the USD, some are pegged on other cryptocurrencies, while others rely on a combination of algorithms and smart contracts.
This field is still a developing market that has its shortcomings. Nonetheless, new players are entering this space regularly to resolve these drawbacks. SameUSD has come to mitigate the underlying risks associated with stablecoins.
Features of SameUSD
StableUSD from the Samecoin ecosystem are stablecoins with fiat-like values that are built with digital payment in mind. They optimize on speed and privacy, bringing together the merits of fiat and cryptocurrency. SameUSD has the following unique features that set it aside from other stablecoins;
- Pegged to a bundle of stablecoins: This has the benefit of insulating the stablecoin against shocks such as price volatility and regulatory risks faced by other fiat-backed stablecoins.
- Decentralized: This brings about transparency. It also helps in averting the risk of over issuing the stablecoin. All transactions are in real-time and can be monitored within the blockchain network.
- Embraces open market arbitrage: It has been expensive to exchange one stablecoin for another. Samecoin solves this issue by allowing free exchange between various stablecoin through open market arbitrage.
- Will always scale up even if the individual stablecoins are struggling: Most stablecoins will only scale up if the asset against which they have been pegged also scales up creating limitations. With SameUSD, it’s dynamically minted and burnt using the Samecoin Protocol based on the reserves. Samecoin can scale up easily, effortlessly, and dynamically.
Applications of Stablecoins
Stablecoins have great potential should they be incorporated into the mainstream market. Think of a scenario where you are paying for a product overseas, and all that you are prompted to do is make payment without conversion.
They can be an alternate source of loan in circumstances where you don’t qualify for one from the traditional banks. Also, you can safely take care of recurring bills such as rent, salaries, and subscriptions through the use of smart contracts. Stablecoins possess huge potential to revolutionize the future of finance, should they be adopted globally.
Currently, stablecoins are being put to use in the real world, although on a small scale, as follows:
- As a store of value: A few people around the world have opted to store their assets in stablecoins, to guard them against hyperinflation of the fiat currency and other cryptos.
- Making payments: Most renowned entities are accepting payments via cryptocurrencies. WordPress, Microsoft, and Walmart are just but a few examples.
- Salaries and remuneration: Stablecoins are currently being used to pay workers, although on a very small scale. Nippon Yusen Kaisha, a Japanese shipping company, is an example.
- Loans: Currently, there has been a spike in institutional stablecoin loan demands. This has been a high yield opportunity for debt investors offering double-digit interest rates.
Stablecoins applications, in the real world, look promising as they continue to expand and develop. Samecoin’s SameUSD offers a perfect alternative for cushioning one’s assets against hyperinflation because of the level of stability it is guaranteeing. It is also a faster and more secure stablecoin that can be used in making day-to-day payments.