The Impact of the Asset-backed Cryptocurrencies to the Crypto Industry

Handy Tips / 07.11.2019

In a decentralized world, fluctuation of prices is something that crypto enthusiasts have become accustomed to, especially the emotional rollercoaster of huge prices swings. The crypto market can be described as pirates at sea where the bigger ships are always trying to conquer the smaller ships in order to amass wealth and treasures. Crypto enthusiasts found a way to curb all these highly volatile crypto markets by the introduction of stable cryptocurrencies which serve as a reliable hedge during market fluctuations.

There are three basic kinds of asset backed cryptocurrencies and these employ various mechanism in order to keep the funds of its users away from the crypto market swings. Fiat backed cryptocurrency, Commodity backed and Cryptocurrency backed assets are the common ones that is widely used in this industry and most of them are all deployed on the Ethereum network to ensure maximum security and transparency of service. Described below are some of the few asset-backed cryptocurrencies that are commonly used in the cryptosphere.

DGX

Is a gold backed digital currency deployed on the Ethereum blockchain network where 1 DGX equals 1 gram of gold securely stored and managed by DIGIX group of companies. Their fully transparent and audited document trail ensures that the total amount of gold deposited is always equal to amount of DGX Tokens in circulations. DIGIX leverages on both Bureau Veritas and London Bullion Market to ensure that all physical golds deposited are rightfully owned and 99.99% pure. You can read our full review here.

Gemini USD (GUSD)

A fiat backed cryptocurrency that is regulated by a New York Trust Company to ensure that there is always a 1:1 balance between this cryptocurrency and the United States Dollar. One unique feature about GEMINI USD is the combination of both offline and online strategies in minting new tokens. The token generating smart contract adopts the security of offline systems yet runs with the flexibility of an online system in creating new tokens. OKEX and Huobi Exchange platforms serve as the reservoir of GEMINI USD and users can make purchases of GEMINI USD through either their OTC or Exchange services.

TUSD

True United States Dollar is also another fiat backed cryptocurrency that is backed on a 1:1 ratio with the US Dollar and with funds stored in an escrow bank account. It’s a highly liquid crypto asset deployed on the Ethereum blockchain and spread across over 100+ market platforms (exchange and OTCs inclusive). Purchasing TUSD occurs within just a few clicks through any of the platforms mentioned above.

The Benefits Stable Cryptocurrencies offer to Crypto Enthusiasts

Bitcoin, Ethereum or none of the major altcoins stand the chance of being described as a good payment method when the global adoption of cryptocurrencies set in because of how volatile they are.  That is the main reason why crypto enthusiasts developed stable cryptocurrencies in order to curb the volatility of cryptocurrencies when used in purchasing items. Imagine, giving an item worth $1000 US to your customer and the market crashes so deeply your income slashes by $200. This feels like daylight robbery of which you have no control of.

Through the use of stable cryptocurrencies, merchants can now trade without any fear of market volatility. There is a common thought that is shared by most people in the crypto industry that if digital currencies are ever going to be used in the purchasing of items it would surely be with the use of stable currencies of which TUSD, GEMINI USD, Tether etc.

Crypto traders also leverage these stable coins to keep their earned income from crashing at the end of the daily trading.

Commodity backed stable currencies like DGX have also made it possible for users to hold fractions of some commodities digitally, something that historically wasn’t possible due to the physical nature of gold bullion.

Conclusion

The use of stable cryptocurrencies has been a great tool in regulating the highly volatile crypto market. Most of these offers are standard ERC 20 Tokens, and therefore provide ease of use and a high level of support within communities, exchanges and wallet offerings.

Transactions are secure and unlike bitcoin, fees remain affordable whilst still ensuring a high level of security. Buyers and sellers can now engage with each other with the use of stable currencies and have absolutely no fears of sudden crypto market crashes. Like a pirate of the sea, knowing when to move your profits onto stable ground is sometimes the secret in securing your financial goals.

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Holds a degree in BSc. Nursing from the University of Cape Coast, Ghana yet an addict to the blockchain technology and the cryptosphere. He combines the promotion of crypto projects and also the making of professional contents all to get innovative projects to the real world. He is a passionate Community manager and a Marketing Advisor for blockchain startups.