Stablecoins are the newest step towards legitimizing cryptocurrencies. These currencies have all the benefits of digital currency with extremely low volatility. Stablecoin gaming companies may soon make substantial inroads into the online gambling sector.
In recent years, online gamblers have realized how quick and convenient it is to finance their accounts using cryptocurrencies instead of credit cards or bank cards. But they also got unanticipated perks like anonymity, security, and inexpensive fees from utilizing the currency.
Some of the best and most renowned gaming sites now accept cryptocurrencies. Meanwhile, new crypto-only sites have sprung up.
The fundamental issue is that even the most popular cryptocurrencies like Bitcoin, Ether, and Dash are highly volatile. This indicates that the coin’s value fluctuates dramatically and unexpectedly. So gambling with coins is a risky affair.
But, as the name implies, Stablecoins address this issue. That’s because they’re designed to have a stable value. So either ties the coins to a stable asset like the dollar or gold or has a built-in system that adjusts the price when it begins moving too far in one way.
As expected, Stablecoins have advanced in recent years due to their solidity and creativity. They can solve the issue of cryptocurrencies being more of an investment vehicle than a replacement for physical cash if widely embraced. It may also lead to a surge of Stablecoin gaming sites throughout the internet.
In the next post, we will describe how Stablecoins function in comparison to other cryptocurrencies. We’ll look at why the coins are a great alternative to other cryptocurrencies for online gaming. And we’ll look at what Stablecoin gaming sites can provide once they truly take off.
Cryptocurrency as a Store of Value
The first cryptocurrency, Bitcoin, was founded approximately a decade ago to show that non-physical legal money could be used to conduct secure payments. This was done using blockchain technology. Without going into the nitty-gritty of the blockchain, suffice it to state that it authenticates and validates Bitcoin and other cryptocurrency transactions without a third party.
Consider your credit card use. You must first open a checking account, and the bank will then be privy to all your transactions. It also has your critical personal data.
Credit cards demand the same type of surrender. And we put up with the costs and problems that come with utilizing these payment methods because we trust these institutions with our money.
Cryptocurrency does all of this without a third party. It reclaims the user’s financial autonomy. Not to mention, it reduces transaction fees and settlement delays.
Despite this, Bitcoin has yet to become a viable alternative to fiat currencies, mostly due to its popularity as an investment instrument. People spotted the coins’ potential early on and stored up. As a result, prices skyrocketed, and more individuals joined.
Prices have fallen in the last year due to a market correction. Still, many individuals acquire bitcoin with no intention of ever utilizing it properly. They either hold them as long-term assets or actively trade them like equities.
Volatility in Bitcoin
Because bitcoin is utilized more as an investment property than a payment mechanism, its value is very volatile. Imagine a step-by-step illustration from the perspective of internet gambling.
This is a terrible circumstance, and you are unlikely to face something similar. Also, the prices may have worked to your advantage. That is, the value of the coins may have risen while in your possession and fallen once deposited.
In short, people who desire to bet with coins have very little consistency. These issues aren’t confined to gaming. This example shows that this issue can arise regardless of how you use your bitcoin tokens.
That’s why, despite the currencies’ increasing penetration, many companies remain hesitant to accept bitcoin as payment. It’s easy to see why the coins don’t quite live up to their potential as alternative currencies. That’s why the idea of a Stablecoin, and hence Stablecoin gaming sites, is gaining momentum.
How it Works
Your coins would have been worth roughly $1,000 when you got them back. And you could deposit it back into your account without worrying about the coins’ value skyrocketing the moment you lost custody of them. A Stablecoin can achieve that.
What does it do? There are several methods. The most prevalent is that the coins’ value is maintained by the value of an underlying, stable asset.
Consider the US dollar. The value of this money won’t vary considerably in a short period of time as a result of the actions taken to maintain stability by the administration.
Of course, the dollar and other international currencies fluctuate in value. That’s what makes the forex market. That’s why you have to swap currencies while you’re abroad.
But established international currencies do not change substantially in value in a short period of time. That’s why prominent Stablecoins like Tether and True USD make their coins as similar to the US dollar as possible.
Stablecoins can accomplish similar stability in various ways. They are:
Linking other assets
It may be possible to discover a Stablecoin using gold as the base asset. Venezuela utilized oil as the basis for a well-known Stablecoin. An asset with low volatility might be a strong foundation for a Stablecoin operation.
Using a Lot of Cryptos
The issuers can reduce volatility by backing a Stablecoin with a basket of cryptocurrencies. It’s the same idea as diversifying a portfolio with various assets. The coin issuers (DAI is the most popular) don’t have to quit cryptocurrencies to obtain the desired stability.
Using smart contracts, a coin issuer may manage the value, so it never goes too high or too low. These contracts would function as a deterrent to volatility.
In other circumstances, genuine collateral is used to stabilize these currencies. Other coins maintain price stability without collateral. The purpose of these currencies is to keep their value stable in the short term while putting them in play more than investment coins could hope to be.