The demand for cryptocurrencies is growing rapidly, so a stable currency has the potential to flourish in global transactions. Blockchain technology is being studied by many different industries including logistics, healthcare, fintech and logistics. Blockchain technology has the ability to decentralize and provide security features that allow for transaction regulation and smooth operation. In order to take advantage of the Blockchain network’s features, businesses can create stablecoins by using various crypto networks. Holding funds allows investors and traders to access cryptocurrencies. These funds are stablecoins. They are an integral part of the Blockchain network.

What is a Stablecoin, and what are its benefits?

Stablecoins can be described as cryptocurrency that has a value associated with tangible assets such as real property, gold, or US dollars. Stablecoins are associated with tangible assets to help stabilize their price and protect against fraudulent activities within the cryptocurrency ecosystem. Many cryptocurrencies exist, including Bitcoin and Ether. However, these have the downside of price fluctuation. However, a stablecoin fixes the value of the currency against an asset and eliminates price fluctuation.

Stablecoins are a product of XDC Network that aims at filling the gap between the cryptocurrencies’ benefits and the fiat currencies’ stability. While cryptocurrencies can be used globally, Ether and Bitcoin remain volatile. Bitcoin’s value has increased from USD 1000 in 2017 to USD 20000 in 2017. The constant rise in value of coins can ruin the stability and make it difficult to sustain. Because there is no central authority that oversees trust in the currency’s ecosystem, decentralized currencies are able to minimize the extra costs.

Different types Stablecoins

There are many types and varieties of stablecoins.

Fiat-Backed

These stablecoins can be backed up with fiat currencies. Fiat-backed stablecoin tokens are valued at a 1:1 ratio. Tether, which is a stablecoin has its price fixed at a 1:1 ratio against the USD. A fiat currency must be sold as collateral in order to guarantee the existence of a stablecoin which is fiat-backed. A fiat currency can be used as collateral by the financial custodian. This requires regular auditing in order to verify the collateralization. Gemini stablecoin, GUSDT is one example.

Non-collateralized

Non-collateralized stabilitycoins can be those that do NOT have collateral. These stablecoins will be those that are based on the fundamentals from the Seigniorage Shares program. The difference in printing cost and value of money can be explained using the Seigniorage concept. The algorithm changes the supply of these coins to control its price. These stablecoins may be sold if they have a lower price than the linked cryptocurrency. If their value exceeds the linked currency’s, additional tokens will be made available to the market.

Cryptocurrency-backed

The crypto-backed, stable currency functions in the same manner as the legal-backed stable currency. However, the crypto-backed stable currency does not allow for the use cryptocurrency as collateral. For example, Ethereum can be used as collateral to create cryptocurrency-backed stablecoins. These tokens employ security compromises in order to compensate for volatility of the cryptocurrencies they will be used as collateral. This means that stablecoins do not depend on encrypted collateral at a 1:1 ratio.

Commodity-Collateralized

These stablecoins are backed in part by commodities. However, they can also be backed and backed by other types or exchangeable assets like precious metals and real estate. Gold is the most widely traded guaranteed commodity. Commodity backed stablecoins can be described as tangible assets that have an actual value. These commodities can appreciate over the course of time, making them more motivating to be used and kept. Anybody can invest in precious metals or real estate with commodity-backed stabilitycoins. Generally speaking, these assets can only be invested in by wealthy investors. Stablecoins however have opened up investment options for everyone around the globe.

What is XDC Network?

XDC Network – A hybrid blockchain designed for enterprise use. It’s an interoperable network with high liquidity. It is based on a Delegated Proof of Stake Consensus. The XDC Platform uses a hybrid architecture and assists developers and users with the creation of interoperable dApps. XDC Network enables fast settlement and digitization of trade transactions. A hybrid blockchain system allows it to combine the best aspects of both private and public blockchains. XDC Network’s blockchain can change the way international finance, trade, and supply chains are managed. It is a next-generation computing system that uses blockchain technology for global business and community connections. The network runs on its natural fuel, namely XDC. Data can be securely transmitted by companies using public or private blockchain systems.

The XDC protocol may be used to send messages and confirm payments that have been approved by national and cross-border authorities. Financial institutions may recognize XDC tokens and use them as a payment settlement. The XDC protocol architecture allows for the use the existing cryptocurrency smartcontract layer, the KYC /AML Layer, and price stability. It supports Guarda wallets. XDC cryptocurrency has been widely promoted and investors are claiming that it can bring in huge profits long term.

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