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Introduction

When we talk about cryptocurrencies we face an investment that can be lucrative for many, but for others it can also represent ruin. If we do not handle the information about the behavior of the financial market well, there is a probability that our investment will disappear in our accounts, leaving us unwilling to invest again in the crypto world.

Digital assets, as we all know, are subject to fluctuation, that changing behavior which attributes ups and downs to a given crypto. Everything is related to the amount of investments made in the stock market. The trust offered by a given asset as well as its advantages and products offered on the blockchain will also play an important role.

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Bitcoin as a reference value

The cryptocurrency with the highest value remains bitcoin which since its genesis brings together the largest number of investors around the world who exchange powerful enough to maintain the growing boom of this cryptocurrency.

The value of most known chips is governed by bitcoin, hence the fluctuation of the values ​​is in tune with this asset.

Now that we all somehow find ourselves working with decentralization and somehow we are interested that the value of our favorite currency has the most acceptable behavior, I think we should ask ourselves:

• What is the most recommended tab to invest?
• Is there any type of cryptocurrency whose value is stable?
• How do they work and what are they?

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A currency with stable value

"According to the above, I have investigated some aspects related to this topic and I would love to share with you all the information related to a type of cryptography which leaves much to be desired."

I refer to the "StableCoin", which I will talk about in the next segment trying to understand the advantages of this virtual asset.

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What is StableCoin?

It is a cryptocurrency whose creation protocol is designed with the intention of maintaining a stable value, so that variations in the market do not directly influence its performance, nor its performance as an exchange record.

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The idea of ​​the cryptocurrency is to achieve an economy where you don't have to depend on FIAT money, that is, where the national currency of a given country or region is not who determines the financial destination of economic investments.

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FIAT money

With FIAT money you can buy crypto in some exchange where it can be accepted as a means of payment. Perhaps, there we are taking the first step to achieve a future lucrative investment with large profit margins.

_{[](https://economia.com.ve/cae-el-dolar-frente-al-euro-luego-de-la-victoria-de-trump/)}

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Related issues

The problem is that when we carry out operations with encryption we are subject to certain waiting times in which the value of a crypto in the market can vary, which can have a considerable loss of capital or if we are lucky, there could also be a case where we obtain profits .

"In this case let's talk about the most unfavorable point. The fall in the investment price; it can cause that when we use our FIAT to buy chips we end up with a value in the hands which is lower than the initial investment."

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How does StableCoin work?

A StableCoin allows the value of a currency in which we invest to remain stable throughout the course of our operation. Thanks to its value being anchored 1:1 to the value of the FIAT currency that we use to buy it, this becomes a reserve mechanism that supports the investment.

_{[](https://buenbit.com/blog/como-invertir-en-comunidades/)}

Through an auditable administrative process, the creators of StableCoins use an investment fund to support the record, whether its value is associated with the dollar, the euro, the yen or other national currency, the design of a Stablecoin considers the creation of sufficient tokens above the value of the associated FIAT money, so that the possible fluctuation in the market does not generate a negative impact on it.

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Solutions

"Mainly, the creation of a StableCoin is aimed at solving two potential problems capable of affecting any investment."

Volatility

Only by having some crypto stored in our portfolio, we can see that increases and decreases in market value can cause it to disappear or become unusable.

_{**User's case**}

"From my own experience, I have accumulated a certain variety of cards which I obtained through Airdrops or as a form of payment for the accomplishment of some task. Currently, their value has a tendency to "zero" and nobody is interested in buying them."

If in another case, it had been a StableCoin, they were still in my portfolio while retaining its value and allowing me to make a profit at the time I decided to use them. Its value anchored to the dollar or to another national currency used as fiat money would have allowed it to survive the fluctuation.

Exchanges

Suppose we do operations in a new exchange to which we have subscribed. We use our fiat money to buy something from Bitcoin, Ether, EOS, STEEM, or any crypto that can occur to them. It turns out that the slowdown of the platforms generates a certain waiting margin, as in the case of bitcoin which due to its large demographic figure, the technology used generates long waiting times that vary from hours to days to finalize a transaction.

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_{[](https://criptotendencia.com/2018/10/13/una-vez-en-el-mercado-nunca-lo-dejas-adam-white-se-une-a-crypto-platform-bakkt-de-ice/)}

There may also be the case, according to the type of crypto accepted in a given exchange, we are in need of buying some unusual crypto or with a weak market value (Remember that not all exchanges will necessarily accept the most recognized tokens ), in any case, the nature of the investment and the waiting periods may affect the final destination of the exchange.

"However, if it were a StableCoin, all operations would be guaranteed at full risk. Because they are precisely designed to withstand fluctuation with sufficient reserve of funds to guarantee user satisfaction."

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Offer and demand

Although, a StableCoin retains parity with some FIAT value, it should be noted that according to market behavior, its value may be affected percentage at a given time. In these cases, it is the responsibility of the Token-creating company to issue new tokens to maintain the balance of the system and the volume of backup assets, also subjecting the regulatory audit processes that allow it to preserve transparency.

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StableCoin backup

We have mentioned that StableCoin can support their value by making pariety with some kind of national currency,

For example: Dollar, Euro, Yen or others.

But, it should be noted that stable value is not only associated with FIAT money, we also see the case when a StableCoin is associated 1:1 with another cryptocurrency, which is considered superior or simply more solid,

For example: Bitcoin, Ether, EOS, to name a few.

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SMT

_{**(Smart Media Tokens)**}

There is the case of the SMT Smart Media Tokens created in the blockchain infrastructure which aims to achieve the stability of its value with the support of STEEM as a referential token. Of course, being STEEM an independent crypto with its own economy, this could have repercussions on the rest of the SMTs created, since they would be subject to the fluctuation of the native token.

However, the model serves to explain the intention of a StableCoin in the market.

_{[](https://www.canardcoincoin.com/steemit-annonce-date-sortie-smart-media-tokens/)}

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1:1 parity

_**SBD|USD**

"I should also mention the case of the SBD, as a utility token of the Steem Blockchain which was originally designed to keep its value anchored 1:1 with the US dollar. In spite of the variability of its value at present, it should be noted, that once its behavior remained on the rise for a reasonable time. It will depend on supply and demand within the Steem Blockchain economy, so that this virtual asset can be established again in 1:1 parity with the dollar."

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Other cases of StableCoin, are those that have their value anchored to an economic resource or physical asset that is not subject to devaluation, such as:

• Gold
• Emeralds
• Diamonds

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Some StableCoin available in the market

This is a very extensive list of stable cryptocurrencies which operate in most of the known exchanges, but I will try to mention some of the most relevant ones, with no intention of classifying them or maintaining an order of specific importance:

• MakerDAO
• DAI

Monetary stabilization mechanism based on the Ethereum chain, it is a complex system of blocking cards in an economic model that allows its stable value to a USD dollar, being one of the most trusted in the market.

• Paxos STANDARD, it is an ERC-20 backed by fiat money
• Gemini Dollar (GUSD), another ERC-20 backed by fiat money
• Tether, backed by US dollars
• USD Coin, 1:1 backed by USD, deposited in an auditable bank account.

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• PAX Gold
• Digix Gold
• GoldMint

They are cryptocurrencies whose value is backed by gold reserves.

Confirmed vaults protected in different parts of the world under strict security standards and whose value can be changed by physical gold according to the guidelines offered by certain exchanges and to the policies of each company.

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Conclusion

In the quest to improve financial security and carry out an effective economy within the blockchain, the StableCoin reason gains strength as the best proposal for investors who want to keep their capital safe in a frank win-win relationship.

Everything will depend on the preferences of each person and the culture they have formed within the world of encryption, to bet on Stablecoin as the low-risk cryptocurrency whose model is able to dominate the stock market by positioning itself above the other chips of utility whose fluctuating value keeps customers on constant alert.

Maintaining parity is a fundamental aspect of the StableCoin to keep the trade safe, allowing the crypto to be blocked until the client wishes to change them, without generating loss of value due to fluctuation.

Investing in StableCoin is a way to give solidity to the economic model of the future based on cryptocurrency, categorizing blockchain as a decentralized technology with notable advantages for the investor, thus surpassing the traditional economic model dominated by centralized companies.

_{[](https://0xcj.com/2019061519186.html)}

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After this analysis about StableCoin, I have many questions in mind:

• Are StableCoins 100% reliable?
• Can STEEM become StableCoin?
• What can be the disadvantages of investing in StableCoin?

And, what do you think about it? Please let me know...

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"Review conducted by @nachomolina, for dissemination and information purposes. It is recommended to seek advice before making any financial decision on the material described above."

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_{**[Original Content] @nachomolina**}

venezuela 2020

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| _**Regards,

**|https://i.imgur.com/FPV96m1.png | |---|---|
_{**"Your opinion is important, I will gladly answer your comment"**}