Can Stablecoins Truly Offer Economic Stability and Predictability in an Age of Uncertainty?
Beneath all the related hype surrounding blockchain technology exists real substance in the industry’s groundbreaking applications that impact our understanding of modern economics.
One of those concepts is the trending stablecoin. Stablecoins, such as Tether, US Dollar Coin, or the newly minted JP Morgan Coin, are designed to function, as their names imply, like a digital currency pegged to a stable asset such as the US Dollar or to a commodity such as gold. In theory, this promises to encourage greater mainstream adoption of digital currencies if they are backed by real-world assets as it circumvents the issues of price volatility that cryptocurrencies such as Bitcoin or Ethereum face.
What happens to price volatility if a stablecoin is backed by fiat or cryptocurrencies?
Price volatility in both crypto and fiat currencies is a serious global economic issue. The precipitous price drops of Bitcoin and Ethereum have left many with little to show for their investments. Meanwhile, fiat markets have suffered from inflation across the globe. Look no further than Venezuela, Iran, and Zimbabwe, just to name a few, to see the effects of rapidly declining currencies. Even the US dollar, frequently used as a financial index due to its relative stability, experiences annual inflation and has lost more than half of its value over the last 30 years.
Are there any solutions?
One project seeking to stabilize both crypto and fiat markets is Anchor, a stable currency pegged to a proprietary index. Anchor is based on a proprietary algorithm, the Monetary Measurement Unit (MMU) based on the global economic growth calculated from daily international financial data from more than 190 countries.
While fiat currencies are in constant decline and cryptocurrencies suffer from volatility, the growth of the global GDP has demonstrated long-term stability. Anchor’s MMU calculations represent the average global growth over extended periods of time to minimize the effects of short-term shocks, such as global recessions or politically influenced economics shifts, such as Brexit.
Anchor has laid the groundwork for a monetary system to protect, preserve, and enhance investments of individuals, businesses, and organizations over time with a transparent, stable, and predictable financial standard.
Currently, the Anchor Team is preparing for its presale launch in May 2019 and presenting at a number of blockchain industry events and panel discussions around the globe, including Security Token Future, an STO-focused event during Asia Crypto Week in Hong Kong on March 15th, 2019.
To learn more about the Anchor project and follow its development, you can visit their site https://theanchor.io.
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