Greetings Readers, at the beginning of 2020, There was hype around cryptocurrency and the world's future in a decentralized system. The hype doesn't seem to end soon, but The thing is, people, see crypto as an investment only. So, today I we will contemplate about cryptocurrency but in a different sense.
The cryptocurrency was meant to transfer and store value and not to invest in specificlly. Trading in currency is common, but investing in any currency comes with high risks because many variables can affect the value of the money. In simple words, cryptocurrencies are not only made for investment.
After 2020 bitcoin jumped 500%. That's insane and abnormal for any currency; in 1995, the 1 USD = 31 INR took 19 years to double and reach the level of 1 USD= 62 INR, so many people became millionaires because of this bull run bitcoin and other ajor currencies. You probably think that it is a good thing, right. Yes, if you think of it as an investment, it is unsuitable for a currency. It makes bitcoin an irregular and unacceptable currency. At the same time, it is very best option to invest in long run because there are many factors that makes bitcoin strong, developing and highly demanding. That is why bitcoin asset is profitable in long run.
Let's assume that you are the owner of a shop in 2020. Your business boomed, and you started making exorbitant money. Hence, you hired an accountant to look after your finances. Therefore, you signed a contract with him promising to pay 1 BTC per month, and then a BTC was worth $10000, which is a standard salary for an accountant. Still, after some time, the price surged, and now one BTC is $60,000, but the typical wage of an accountant hasn't changed, so now you are legally obliged to pay way more than you should to your accountant, so that's why it is not a good thing.
To become an ideal currency, from means to invest in crypto hype cryptocurrency need to make them stable, meaning less venerable to the market, economy, and government regulation fluctuations.
Money doesn't come out of thin air. If a government wants to print money, it has to put some gold or other currency in its reserves so that it doesn't lose its valuation because of a new inflow of money.
Some Cryptocurrency also similarly solves this problem. They are called stable coins. Tether and TrueUSD are backed by USD in 1:1 ratio, and both are stable and can be used as a currency. HBD is also great stable coin and soon we will seee mroe strength in HBD. you will get 12% interest on $HBD savings so it is great for the people who don't want to invest in volatility. You can also make your currency stable by supporting it with another cryptocurrency, but it will also be prone to fluctuations unless you back it in a large ratio like 1:2 or 1:3. The value of everything is decided by demand and supply, so you can also introduce an algorithm to control the supply to stabilize the coin. Currency backed by USD will also indirectly be in control of the central system, so the best way is to use an algorithm and generate money to control the supply the same way a government does it, but in this, the supply decision will not be in one hand the power of decision will be decentralized.