Calls for binding the bitcoin value against the established name
Ethereum, the second largest cryptocurrency according to market capitalization, was offered as a potential alternative to a traditional fiat name. One of the most important advantages of attaching the value of bitcoin compared to the established stable currency is that it can provide investors more predictable and more stable investment portfolio. However, this is not without his challenges.
In recent years, many people have seen investing in cryptomen, such as Bitcoin because of their historically extreme volatility. Despite the tendency of the market to rapidly fluctuations in prices, some investors are still hesitant to engage. This phenomenon has led to an increase in interest in alternative currencies that can provide a more stable investment option.
However, the value of bitcoin against the established stable currency is several obstacles. One of the main challenges is the lack of standardization in the crypto market. Without one authority that follows the space, it may be difficult to set clear instructions and protocols to stabilize or bind the cryptocurrency.
Another challenge is the technical difficulties associated with the achievement of stability. Although a stable currency has been set, a number of technical considerations are still taken into account, which must be taken into account, such as the provision of liquidity, maintaining the supply and demand and addressing regulatory questions.
In addition, there are also concerns about the potential risks associated with the value of bitcoin against the established currency. For example, if the stability of the selected currency is not preserved, the cryptocurrency may suffer a loss of value, which potentially leads to significant financial losses for investors.
In addition, the value of bitcoin towards the established stable currency may also limit cases of potential cases of use and application. Some argue that this approach suppresses innovation and limits the ability of the cryptomena market to adapt to changing market conditions.
The example of Venezuela's Petro is the main illustration of why attaching the value of bitcoin against the established currency is not a simple solution. In 2018, the Venezuelan government introduced its own Stablein, Petro, which was bound to the US dollar for 1: 100,000. Despite the effort to stabilize the cryptocurrency, however, eventually failed due to a lack of institutional acceptance and widespread distrust.
The conclusion is that while the binding of the value of bitcoin against the established stable currency may appear as an attractive solution for investors looking for stability, it is not without its challenges. Lack of market standardization, technical problems associated with achieving stability and potential risks associated with cryptocurrency binding are more complex than it seems.
Instead of focusing to stabilize the value of the bitcoin against the established currency, some experts argue that alternative approaches should be reviewed. For example, decentralized stableceoins such as USDC or DAI could provide a more reliable and safer way of storing value in the Blockchain ecosystem.
Ultimately, the future of cryptocurrency will depend on their ability to innovate and adapt to changing market conditions. As investors, we must be aware of the problems of bitcoin against the established currency and consider alternative approaches that prefer decentralization, security and innovation.
Sources:
- "Petro: Stablacoin for Venezuela?" In the New York Times
- “Captracts of cryptocurrency against established name” from Coindeka