It seems like some people are having difficulty understanding the concept of ‘Stablecoins’. Simply put a stablecoin is a coin that has low volatility. They are also known as price stable cryptocurrencies. Typically, most stablecoins are pegged against any number of currencies including the dollar, or an index such as the consumer price index.
Cryptocurrencies like bitcoin and Ethereum serve as a medium of exchange but given their volatility, this can pose a problem for users. When you spend a Bitcoin, the actual value when the transaction is settled on the blockchain can vary greatly. So a transaction involving 1 Bitcoin at $7,097.50 at the time of purchase, could end up transferring more value, or less value when the transaction is settled on the chain, let’s say $7,000.00.
That would be similar to selling your car for $7,097.50, and the buyer paying $7,097.50, but you only get $7,000.00 deposited in your bank account. This is a primary factor detouring some merchants away from accepting cryptocurrencies.
In comparison, a stable coin, at $7,097.50 at the time of purchase, when the transaction is settled on the chain, would theoretically settle at $7,097.50.
According to several industry influencers and venture capitalists, the promise of stablecoins is larger than that of bitcoin itself. With the launch of VC backed entities such as Tether, Basecoin, Carbon, and Havven.
According to the Stablecoin Index, (https://stablecoinindex.com/) created by Multicoin Capital Research Associate Myles Snider, at the time of publishing, there are already over 50+ stable coin projects.
There are, however, several things to take into consideration, such as economic stability, token mechanics, the design of the stablecoin and the initial traction required to maintain the peg and future stability. Even with the promise and increased interest, they are still vastly underutilized with the most prominent use case right now being traders using them to preserve capital during bear markets and periods of volatility.
In comparison to the overall cryptocurrency industry, the stable coin landscape is growing very slowly. We should see several advancements released in 2018, with the launch of non collateralized stablecoins, which can potentially direct the ecosystem in a new direction, depending on their effectiveness.