A stable currency can thrive in global transactions due to the growing demand for cryptocurrency. Blockchain technology has been extensively researched by people from many industries, including healthcare, logistics, and fintech. Different industries can benefit from the decentralized aspect and safety features of Blockchain technology for smooth operation and regulation. Industries can use the different crypto networks to deploy stablecoins within a cryptocurrency ecosystem. Investors and traders can access cryptocurrency by holding funds. These funds are stablecoins and are a key component of the Blockchain network’s mechanism.

What is a Stablecoin?

Stablecoin is a type of cryptocurrency whose value can be associated with a tangible asset such as real estate, gold, or the US dollar. The purpose of this value association between a stablecoin and a tangible asset is to stabilize the price, as well as prevent fraudulent activity in the cryptocurrency ecosystem. Although there are many cryptocurrencies, such as Ether or Bitcoin, they have the disadvantage that their prices can fluctuate. The value of a stablecoin is fixed against an asset, eliminating the possibility of price fluctuation.

Stablecoins from XDC Network aims to bridge the gap between the benefits and stability of cryptocurrencies and fiat currencies. While cryptocurrencies can be used worldwide, few coins such as Bitcoin or Ether are volatile. In 2017, Bitcoin’s value rose from USD 1000 to US$ 20000. The instability of Bitcoin’s value makes it unsustainable. Because decentralized currencies don’t require a central authority to ensure trust in the currency ecosystem, additional costs are minimized.

Different types of Stablecoins

As you can see, there are many types of stablecoins.

Fiat-Backed

These stablecoins are backed by the fiat currency. Fiat-backed stablecoin tokens have a value of 1:1. Tether, a stablecoin token, is valued at 1:1 against the USD. A fiat currency can be disposed of as collateral to ensure that a stablecoin is fiat-backed. The financial custodian must be able to dispose of a fiat currency collateral. Regular auditing is necessary in order to determine the collateralization of the token. The Gemini stablecoin (GUSDT) is an example.

Non-collateralized

Non-collateralized stablecoins refer to those that are not collateralized and are based on the fundamentals of the Seigniorage Shares System. The difference in the value and printing costs of money is explained by the concept of Seigniorage. These coins are dependent on an algorithm that changes the supply to control their price. These stablecoins can be sold using smart contracts if its price is lower than that of the linked currency. If their value is higher, they will be offered to the market in more tokens.

Cryptocurrency-backed

The crypto-backed stable money works in the same way as the legal currency-backed steady currency. It does not allow the use of crypto-backed stable currency as collateral. Instead, you can only use fiat currency. For example, Ethereum can be used as collateral to create cryptocurrency-backed stablecoins. To compensate for volatility in cryptocurrencies, these tokens will use security compromises. This indicates that stablecoins won’t rely on encrypted collateral in a 1:1 ratio.

Commodity-Collateralized

Stablecoins that are backed with commodities can be backed by other types exchangeable assets such as real estate or precious metals. One of the most popular guaranteed commodities is gold. Commodity-backed stabilitycoins are tangible assets that have a certain real value. These commodities can appreciate over time which makes them more attractive to keep and use. Anyone can invest in property or precious metals worldwide with commodity-backed stablecoins. These assets are generally reserved for wealthy investors. Stablecoins, however, have opened up new investment opportunities for ordinary people all over the globe.

What is XDC Network?

XDC Network, a hybrid blockchain for enterprises, is a great choice. It is an interoperable, highly liquid blockchain. It operates on a Delegated Proof of Stake Consensus. The XDC platform uses a hybrid architecture to aid developers and users in creating interoperable dApps and hybrid relay bridges. XDC Network allows fast settlement, digitization, tokenization, and quick settlement of trade transactions. It combines the best of both public and private blockchains with the help of a hybrid Blockchain system. XDC Network is a Blockchain that can transform international finance, trade and supply chains. It is also a next-generation computing network that uses blockchain technology to connect global communities and businesses. The network is powered by XDC, its native fuel. To securely and transparently transmit data, businesses can use both public and private blockchain systems.

The XDC protocol is a way to use the protocol as a confirmation layer and messaging layer for approved payments, both national and cross-border. Financial institutions can recognize XDC tokens as a payment settlement layer. The XDC protocol architecture supports the existing cryptocurrency smart contracts layer, AML layer and price stability. It supports Guarda wallets as well as biometric hardware wallets. XDC cryptocurrency is being promoted at the moment. Many investors believe it will make large profits over time.

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