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What is a stable cryptocurrency?

A cryptocurrency is a form of digital money used as a medium for exchange. # Yon lajan-kripto se yon fòm lajan dijital ki itilize kòm yon mwayen dechanj.

Farah Brunache Jan 1 · 3 min read
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#AnKreyòl | Vèsyon Kreyòl nan pati anba a.


What is cryptocurrency?

A cryptocurrency is a form of digital money used as a medium for exchange. It is not physical in form but its exchange happens instantaneously and securely through the internet and digital world. Unlike other forms of money that are backed by banks or government which determine its value; Cryptocurrency's value or price is often considered volatile and can vary widely in any given period of time. Its value is mostly determined by supply and demand. This is where a stable cryptocurrency differs from other forms of cryptocurrency.

What is a stable cryptocurrency?

A stable coin or stable cryptocurrency is a relatively new type of cryptocurrency. The market value of a stable coin is actually tied to some kind of reserve asset that will provide stability and predictability of the price of the cryptocurrency. Examples of a reserve asset include the U.S. dollar, gold, and other foreign currencies. This backing makes the stable coin more appealing to consumers by reducing the risk associated with holding volatile cryptocurrency.

An example of a stable cryptocurrency: Dai

Dai is an attempt at reducing the volatility of cryptocurrency by creating a form of stable coin that is actually backed by a combination of other more volatile cryptocurrencies including Ethereum. This goes against other stable cryptocurrency's methods of operation and it is easy to understand one's confusion on how exactly this process can create a stable cryptocurrency.

However, the creators of Dai; MakerDAO have targeted Dai's value rate to the US dollar and have created an algorithm, the Target Rate Feedback Mechanism (TRFM) that tracks the value of Dai and if the value drops below the U.S. dollar the system automatically raises the price of Dai, causing more demand and lower supply in order to stabilize the value of Dai once again.

Kreyòl

Kisa Lajan-Kripto ye?

Yon lajan-kripto se yon fòm lajan dijital ki itilize kòm yon mwayen dechanj. Li pa gen fòm fizik men echanj li ka fèt prèske menm kote a e avèk sekirite sou entènèt ak mond dijital la. Diferaman de lòt fòm lajan ki jwenn sipò labank oubyen gouvènman ki ap detèmine valè li; valè oubyen pri Lajan-Kripto souvan konsidere kòm volatil and li kapab varye lajman a nenpòt moman. Valè li detèmine pa òf ak demand. Se la yon lajan-kripto ki stab diferan de lòt fòm lajan-kripto.

Kisa ki yon lajan-kripto stab?

Yon pyès oubyen lajan-kripto stab se yon nouvo tip lajan-kripto. Valè mache yon pyès stab lye ak yon rezèv byen kèlkonk ki pral ofri stabilite ak previzibilite pri lajan-kripto a. Egzanp de rezèv byen kapab dola Ameriken, lò ak lòt lajan etranje. Sipò sa a fè pyès la plis apresyab pou konsomatè yo pandan li ap redui risk ki asosye ak posesyon lajan-kripto volatil.

Yon egzanp lajan-kripto stab: Dai

Dai se yon esè pou redui volatilite lajan-kripto pandan li ap kreye yon fòm lajan-kripto ki stab ki gen sipò konbinezon lòt lajan-kripto ki plis volatil tankou Ethereum. Li ale nan sans opoze metòd operasyon lòt lajan-kripto stab yo e li fasil pou konprann konfizyon yon moun sou kòman egzakteman pwosesis sa a kapab kreye yon lajan-kripto stab.

Sepandan, kreyatè Dai yo; MakerDAO mezire valè to Dai pa rapò ak dola Ameriken e yo kreye yon algorit, Target Rate Feedback Mechanism (TRFM) ki ap suiv valè Dai la e si valè a desann pi ba pase dola Ameriken an sistèm nan otomatikman monte pri Dai la, sa ki vin fè gen plis demand e diminye òf yo yon fason pou stabilize valè Dai yon lòt fwa ankò.

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