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The crypto market is notorious for being highly volatile. This volatility might be welcomed by speculators who can make huge profits by making well-timed investment moves. But for most investors who do not have a firm grasp on the market’s pulse, this high price volatility could mean trouble — one erroneous move could wipe out their crypto investments in the blink of an eye.

For those who long for a safe store of their capital to avoid the inherent crypto volatility, there is something that can help; stablecoins. However, insiders believe that these coins are just one part of the solution. The best way to usher in a more stable crypto market is by increasing its trading volume.

One way to solve the market’s high volatility is through the introduction of stablecoins, according to a BBC report. Stablecoins are digital tokens that are pegged to traditional fiat currencies, such as the US dollar or the Japanese yen.

The idea of stablecoins is not exactly new. Tether, the most successful cryptocurrency in the stablecoin market, has been around since 2015, according to CNBC. Pegged to the US dollar, the Hongkong-based Tether became popular among investors who longed for a more stably priced crypto and Tether now accounts for around 90 percent of the stablecoin market.

Tether’s success prompted other start-ups to launch their own stablecoins. One such new entrant into the market is Circle’s USD Coin, a dollar-backed cryptocurrency that runs on the Ethereum blockchain.

Its creators say that the USD Coin is the next step in Internet payments. It will have all the features of cryptocurrencies, such as security of blockchain-based transactions, but it will not be as volatile as the regular crypto because it is pegged to the dollar.

Circle CEO Jeremy Allaire explained:

“Imagine a US dollar coin that you can make payments with, use on crypto networks, or use in smart contracts to pay dividends, but which you can convert back to fiat currency at any time.”

Even the big guys of finance are convinced of Circle’s potential. The company is backed by Wall Street giant Goldman Sachs, as well as Baidu.

But there are those who believe that the introduction of stablecoins is not the ultimate solution for the crypto market’s volatility. Obi Nwosu, founder and chief executive of Coinfloor, believes that the best way to reduce price volatility in the crypto market is to infuse more money into the sector. Ultimately, a greater trading volume will eventually lead to a more efficient and stable market.

Nwosu noted:

“We think that although stablecoins could be popular in the short run, a decentralised currency that is stable and doesn’t have a central organisation behind it will be safer in the long run.”

But even Nwosu admits that it will take a lot of effort to entice large institutions to commit serious money into cryptos and blockchain. One hurdle is that better regulation needs to be in place to make the market more appealing to corporations. In addition, the negative image of cryptocurrencies being linked to money laundering and even terrorists needs to be addressed as well.

Stablecoins, Greater Trading Volume Could Solve Crypto Market’s Volatility was originally found on [blokt] - Blockchain, Bitcoin & Cryptocurrency News.

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