Is it possible to achieve stability through encryption? | Author: Dwayne D’cunha | The Capital | June 2021
For those who seek the advantages of blockchain while investing in currencies hovering near the US dollar, stablecoins are a good investment. One obvious reason most people stay away from stablecoins is that they do not bring enough profits in the short term. There is also inflation to consider. If the US dollar is inflated, then a stable currency that keeps its value at $1 will also inflate, which is far from the decentralized financial goal. Contempt for the dollar seems to be a drag on stablecoins. Volatility is terrible, but this is the reason for increased stimulation, after all, this is a high-risk and high-reward game. If it happens that the top cryptocurrency collapses for any reason, then stablecoins have a chance to become more traditional.
Since cryptocurrencies are relatively new, it is difficult to consider any factors that may depress their value for a long time. Traditional cryptocurrencies work by skyrocketing and then falling. We buy a ton and hope it will rise again. If a cryptocurrency like Bitcoin reaches stability, say 36,000 USD, it is impossible for ordinary people to obtain a Bitcoin. You must also remember that cryptocurrencies are restricted by their nature. This means that for the viability of cryptocurrencies, they must maintain this roller coaster. I think it should be considered a way to include more people without painful value.
Banks certainly celebrate whenever there is a cryptocurrency crash, but recently, they have changed their views. CBDC or central bank digital currency is their way to get on the cryptocurrency train. Unlike standard cryptocurrencies, these currencies are centralized. The idea behind CBDC is just a way to attract everyone by talking about digital currency, while basically maintaining the same legal tender framework. Although only China has proposed its own form of CBDC. Even after enduring destructive conditions such as a pandemic, banks have had a negative or neutral view of cryptocurrencies from the beginning. The determination not to let people use cryptocurrency under the difficult conditions of the pandemic is disappointing.