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LINKS FOR ADDITIONAL READING FOR THIS VIDEO & ALL INFO IN TEXT DOWN BELOW:
Stable coins explained: https://futurism.com/sponsored-stable-coins-future-crypto-economy/
Tether and its Auditors: https://www.coindesk.com/tether-confirms-relationship-auditor-dissolved/
Examining Tethers Audits: https://medium.com/@bitfinexed/the-so-called-tether-audit-that-isnt-an-audit-at-all-5a40cfcc2a75
Tether & Bitfinex relationship: https://bitcoinmagazine.com/articles/warning-signs-timeline-tether-and-bitfinex-events/
BitUSD pegging mechanism explained: https://steemit.com/bitshares/@xeroc/what-makes-the-bitusd-than-nubits
Before I get into this video, I want to reiterate Andreas Antonopoulos’ thoughts on pegged cryptocurrencies. Think of them as rubber bands. If the market wants to move and the stablecoin is resisting it, it will snap. We will take a look at one stable coin at the end of this video that demonstrates just this.
What’s interesting to see with these stable coins is the fact that they are fundamentally different from other cryptocurrencies who’s goal isn’t necessarily to be the most stable coin, but instead to be a coin that increases in value over time.
Mostly, these stable coins work to maintain a constant price by analyzing the market and adjusting their supply. When demand for their coin increases, they create more so their price doesn’t skyrocket, and as demand wanes, they destroy coins to ensure scarcity works to support the value.
Speaking of stable coins that use methods resembling practices of fiat currencies, first we’ve got Tether, I know this one is well known but I’ve still gotta mention it for those who are looking for options. Tether has been providing people with a stable cryptocurrency option for over 3 years now. Here’s the deal: The supply of Tether coins is supposedly backed one to one with USD. Which sounds great, if only this could be proven. They’ve had audits conducted but they are always conducted by slightly inappropriate entities which end up publishing press releases that end up dancing around any kind of definitive proof that the actual USD reserves exist. All that sounds a but opaque, and I haven’t even mentioned the suspicious relationship between this one and the exchange Bitfinex. If you’re interested in learning more about that one, it’s something worth looking into, I’ll post some links down below.
MakerDAO “price stabilized against the value of the U.S. dollar” is accomplished by using a basket of assets as collateral, risky and “capital-inefficient” So instead of having to trust that each DAI coin is in fact backed by an asset owned by the company, you participate by offering up your own collateral in the form of other cryptocurrencies, like Ether. The issue here is the utter volatility of other cryptocurrencies can very well weaken this faith in the DAI’s stability.
BitUSD is pegged by using other BitAssets as collateral. As of today, BitUSD is maintaining a somewhat steady price. This year it’s bounced around from $0.96 to the $1.17 range, but in it’s 4 year lifetime BitUSD has seen a low of $0.75 and a high of $1.36. This doesn’t exactly qualify as a solidly pegged crypto in my mind, but the fact that it has maintained this range for so long and has not crashed to zero, especially after that all time low of $0.75 is a bit impressive. If nothing else, this could be a pretty lucrative arbitrage situation.
Much like I mentioned about MakerDAO, this begs the question, what happens when the collateral falls in value? What makes BitUSD different is that it is completely reliant on Bitshares assets.
Lastly, let’s take a look at a stable coin that perfectly emulates the reference to Andreas Antonopoulos I made at the beginning of this video: NuBits. This one held a pretty stable $1.00 peg for a year and then in just over one week in June of 2016, tumbled from $0.95 to $0.16. After that capitulation it’s price was far less stable and since March of this year, it’s been in a pretty steady decline. Consider this, investors who are interested in stable coins, not specifically for making purchases, but for hedging against negative market volatility, are very likely to sell their stable coins when the market begins to move heavily into the positive. This leaves stable coins like NuBits to scramble with this excess dumping and ultimately leads to a decrease in price, with that is the inevitable decrease in faith. The latter being a much more difficult thing to regain.
there are so many scams at the stablecoin market for example Gemini token that is definitely just a copy of tether
You can say everything about tether, but the fact is usdt is one of the most influential currency in the market.
bitUSD for the win.
very intersting view on stablecoins. I think that tether is the only solid stablecoins and all others are just trying to copy it…
This fud against tether finally stopped (I hope so) with the recent report about its audit. I don't know why people kept saying this bullshit, for me tether is always in the first place.
I hope you talk about the Winklevoss twins' stablecoin Gemini which is really interesting because as far I understand it's backed by money in a bank that is protected like any other bank. Thanks for the videos I always enjoy them and learn something new!
The tokens with the most real-world adoption not covered?
You got unlucky with the timing of this video. Two days later, the Gemini Dollar and Paxos Standard token are released.
Wow! No mention of TrueUSD? That’s my GO TO stablecoin. They even have it on Binance. Andirá an asset on Exodus wallet. You can trade it directly from within Exodus via ShapeShift. They have an escrow system that seems really good. Surprised it doesn’t even get a mention!
I personally don't care about creating stability for speculative traders and oddly enough speculators don't want to see wide price stability either… The people I'd like to see solutions developed for are everyday real life shopping. Stability is needed for shopkeepers who just want to accept crypto for purchases and then to convert into fiat or more supplies after the store closes each night. Hopefully solutions like Australian based Havven can help here… Havven is currently in test mode and is being perfected by trial & error prior to broad release. Good luck to all.
My question is… with tether or other stable coins, how do they make $$$? When you purchase them buy moving a dollar in value to them, do they keep like 1% and you get $.99?
Interesting info! Thanks!
Nubits gave me a nice smackdown when their peg broke, because of all the Tether FUD, I thought I would diversify.
Heidi you need to do something on True USD, Tether is a fractional reserve fraud.
The Dollar has day to day stability because it has a puppeteer (the Fed). Can Fed-like intervention be automated in a non-tethered stable coin?…we'll see. BTW…what about Havven?
Craig Wright said recently tether will be worth much less in not too long
Hi Heidi, Thank you so much for making a video on stable coins. Can you please a make a video about Holo and Holochain? Holo fuel which is the currency for Holo will be asset-backed by computing power and it will eventually become a stable value, but not static because as the holo network grows the value of holo fuel will increase.
Thanks Heidi! This was really useful! Not sure if this came from my request to do a deeper look into stable coins but if so, its great that you are listening to your community for show ideas.
Thanks again for your very informative content! Looking marvelous as always chica de crypto!
Good information in this video.
Just here to say good video, this calls out necessary dangers.
'' Hey, Nice video! You havent said anything about TRUEUSD. Why ? Do you know it? Υοu think Tether is better or Trueusd? Thank you! ''
TUSD
Hello Darling
Tether: the central bank of crypto. VeGold is the gold standard stable coin.
Were is TUSD?
Don't know if it already exists but why not a coin pegged on the electricity price? Electricity is universal and its cost reflects the economy of a country and the means of production. Since we have bitcoin working with POW it could be convenient also? It won't be a strict stable coin but it could be a good way of measuring.
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Heidi I'm an old 8 bit man and you teach me stuff every time i watch your videos . Keep it up .You rock!!
<3
The Dollar isn't stable either. Inflation slowly decreases it's value. Improvements in technology and efficiency are cancelled out by the money printing theives at the Federal Reserve.
A coin pegged to the Dollar that adjusts for inflation and productivity would be more stable.
A coin that reflects a basket of Cryptos and adjusts for changes in Crypto Market Capitalization might work too. As money flows in and out of Cryptos, it wouldn't affect the price of the stable coin.