Answering the question of how the stablecoin differs from the usual cryptocurrency, it is usually accepted to call its main characteristic — stability. However, this is a conditional concept, since it is stable to something. Stablecoins come in several forms and all have both pros and cons.

Stablecoin volatility

One of the main disadvantages of cryptocurrencies is their volatility. As a rule, experts agree that this characteristic does not allow cryptocurrency to become a means of making payments. Roughly speaking, buying a unit of production for 1 conventional unit of cryptocurrency, I can not be sure that tomorrow the same product will not cost 20 times more or less. Although it is precisely this quality that attracts speculators to the market.

However, volatility is in principle normal for traditional currencies, however, the fluctuations of many rates are so insignificant that they do not play a big role. Therefore, the so-called stablecoins have appeared in the world — this is a cryptocurrency that is tied to some asset that is significantly stable in value. Thus, on the one hand, cryptocurrency is not associated with any central bank, but it is also stable, like traditional assets, the value of which does not cause serious concern.

For stablecoin to become a real means of payment, it is necessary that it performs the basic functions of a regular currency:

- be a medium of exchange,

- be a means of saving,

- be the unit of account.

It is the stability of the value of the currency that allows all market participants to plan. Stable prices will make sure that neither the seller nor the buyer lose their funds during the exchange. Therefore, many experts rely specifically on stablecoin — a cryptocurrency with low volatility.

Stablecoin Types

In total, there are at least three strategies for creating stablecoin. The first is to attach it to a fiat currency. The most popular example is Tether, pegged to the dollar. The cost of one coin is $1. The disadvantages of this theory is that stablecoins must be absolutely identical with regular dollars. Just at Tether there were problems with the law. Authorities checked information on whether the cryptocurrency was actually provided with the declared value.

But if cryptocurrency is a full copy of fiat currency, then what are its advantages over fiat? In fact, many stablecoins criticize precisely for this reason — for the lack of a philosophy of “traditional” cryptocurrencies. However, stablecoins help investors to trade. For example, a trader can wait a while for one cryptocurrency to depreciate and transfer funds to stablecoin, where you can safely expect the market to grow again. Note that in this case, you can bind not only to fiat currency, but also to assets like precious metals, oil or something else.

The second model is the same as the first, but the cost of stablecoins is provided not by fiat funds, but by cryptocurrency assets. That is, stablecoin will be tied, for example, to $1, but the value of this dollar will be provided by bitcoin. This model has a problem. Cryptocurrencies are a highly volatile asset, so security should be done with a margin. Nevertheless, in case of loss of the full value of the providing asset, the full cost of stablecoin is also lost. Therefore, its stability is in question. An example is MakerDAO, which is pegged to the dollar but secured by Ethereum.

Another model involves the creation of stablecoins without collateral. They are provided only by expectations about the intrinsic value of the asset. One approach allows you to adjust the supply of stablecoin using smart contracts.

MtCore Is A Digital Asset With Real Value

MTCore is a hybrid stable coin with real physical value: 55% pegged against fiat currency Euro/Dollar and 45% held in certified custodial bank deposit. The value of MTCore is therefore, based on user influence through democratic voting system where the digital currency enjoys financial stability and economic freedom based on market trading and investment.

The BIDERATION software principal function is to deliver bids to the POB process and generate MTCore (digital coin). The BIDERATION system receives coded BIDS, which are then validated, through MTCore public wallet to the User Wallet.

MtCore digital coin benefits:

- Hybrid currency, a stable coin with a sustained valuation in the real economy;

- Real value alignment, physically deposited and 100% net;

- The currency is prepared to be used as a payment method;

- Secure architecture — no need to keep the coins offline to protect you from attacks;

- Currency without transaction fees.

Take advantage of the hybrid stablecoin — invest in MtCore!