WHAT ARE STABLE COINS?

One of the major headaches in the cryptocurrency space right now is the high volatility of crypto assets. in order to achieve mass adoption of cryptocurrency we will need to have a more stable,decentralised ,scalable and private cryptocurrency.

Try and picture a scenario where you go to a shop to buy that valuable present for your loved one that you have been taking months to save for . You pop in the shop you buy the present using the cryptocurrency of your choice which we are going to call crypto X. The following day you realize that the value of crypto X has fallen by 50% . How does that make you feel? You feel cheated and disappointed. Thats where a stable coin comes into action.

So whats a stable coin? A stable coin is a cryptocurrency that is pegged or collataralized by a stable asset like fiat currency or gold. This saves us the above mentioned problem of volatility in cryptocurrencies. Take for example the top 2 cryptocurrencies (BTC ETH), this two cryptocurrencies are characterized by major daily swings ranging from 5% to as high as 20 % this volatility is a very discouraging feature for customers who might want to use it for day to day transactions .

There are two categories of stable coins: Fiat pegged stable coins and Crypto currency pegged stable coins. lets dive into the first category.
Fiat pegged stable coins: some of popular examples of fiat pegged stable coins include Tether (USDT), True usd (TUSD) and Digix.

TETHER
According to tether web site tether is pegged in a ratio of 1:1 with USD which is stored in a reserve. tether is incorporated in many cryptocurrency exchanges trading pairs for example binance ,bittrex among others. Although tether is widely used in exchanges it has had a few challenges including alleged lack of transparency in auditing their reserves and operating a centralized model.

True USD (TUSD)
TUSD is build on a tokenized platform called Tust token which is pegged to the USD. They have solved the problem of transparency by holding their reserves in escrow accounts where they offer daily auditing .

DIGIX(DGX)
DGX is pegged on gold 1 DGX is equal to 1 gram of 99.99 LBMA approved gold, gold in exchange is traded on the dollar.

Next lets see how the other category of stable coins matches to the above category .

STABLE COINS PEGGED ON CRYPTO CURRENCY
this include coins like :
BITSHARES
HAVVEN
MARKER DAO