The largest stablecoin
An expression like “stable cryptocurrency” could seem like a contradiction in terms. That’s, of course unfair, since the cryptocurrency market has been less volatile over the last ten years than, say, Forex or the stock market if you go by objective indicators.
Nevertheless, crypto has developed that reputation, and it’s going to be years before it can leave it behind. But we digress. Within crypto, there is such a thing as a “stablecoin” which is a cryptocurrency whose value is not supported only by its blockchain and speculative forces, but also by being pegged with some physical thing that guarantees at least a minimum value.
Case in point: the Tether blockchain project issues a cryptocurrency called USDT which is pegged to the USD. In other words, according to Tether, each USDT is backed up by an actual dollar, besides the additional value that speculation and the blockchain’s value can confer to it.
The main point is that the USDT price can’t go below USD 1.00 even during crypto winters as harsh as the current one. And the market seems to bear this out. As we write this, USDT is trading at USD 1.01, and it’s the ninth cryptocurrency by market capitalization. USDT is not the only stablecoin in the industry (IBM, for instance, is working with Stellar Lumens to come up with one as well) but it’s the largest one by far.
While there are distinct advantages to a project that combines the power of the blockchain technology with the alleged stability of the world’s most crucial fiat currency, the Tether network is far from perfect. The system is exceedingly slow, and transfer fees are quite expensive. But not to worry, all of the Tether blockchain challenges are about to be solved by Tron.
Tron and Tether
This March 4th, the Tron Foundation announced it would join forces with Tether in a strategic partnership that would allow the Tron network also to issue USDT tokens. It’s going to be a spectacular crossover, and it will go live by the end of the year’s second quarter.
As USDT is issued using Tron’s TRC20 token technology, it will be fully compatible with Tron’s network, decentralized applications, and smart contracts. The collaboration will enhance both Tron and USDT in many ways:
- The Tron network is very fast. Payment solutions in Tron are instantaneous and so cheap that they’re practically free (there is a cost for gas, but it’s very low indeed). So as the partnership matures, USDT will find a network in which its transactions will be equally fast and low cost.
- USDT will be able to take advantage of Tron’s smart contract technology.
- Tron will adopt USDT in full, almost as if it was the network’s native token. This won’t create competition with TRX, but it will allow USDT holders to use Tron’s wide variety of decentralized applications.
- Liquidity will improve for both TRX and USDT.
- It will increase confidence in TRX among potential institutional investors.
- This is an exciting development for Tron and the cryptoverse which will undoubtedly yield fascinating results.
Image courtesy of PixaBay.
Disclaimer: The presented information is subjected to market condition and may include the very own opinion of the author. Please do your ‘very own’ market research before making any investment in cryptocurrencies. Neither the writer nor the publication (TronWeekly.com) holds any responsibility for your financial loss.