Steemit Crypto Academy week 7: Stable coins - Part2

in SteemitCryptoAcademy3 months ago (edited)

Though Stable coins have a wide range of benefits and positive implications they have caused in the crypto space, particularly in bringing about mass Crypto adoption through bridging the gap between the fiat world and the Crypto world. However, these also have some demerits/negative implications. It should be noted that stable coins are a risky investment like any other cryptocurrency; therefore, one ought to invest or trade Stable coins with money they can afford to lose.

Stable coins part2 002.png

Background image:Source

There are plenty of criticisms that many stable coins have faced in the due course of their operations for instance Tether has been accused of pumping the Bitcoin price with millions of its USD reserves and partly had a hand in the 2017 Bitcoin’s bull run.

Crypto critics have long called for Tether to subject itself to an independent audit to verify the veracity of its claims, but such checks have not been forthcoming. Recent changes to the terms on its website also suggest that the stablecoin is being backed by other assets. It says this may include receivables from loans issued. source

This shows some lack of transparency in Tether and certainly builds distrust for Tether from its would-be potential investors.

Some decentralized stablecoins have also been running into difficulty. DAI — an ERC-20 token pegged at 1:1 with the U.S. dollar, with an exchange rate maintained by overcollateralizing with Ether (ETH) — has struggled at times to maintain its $1 price point.source

Stable coins 004.png

Stable coins: image source

Demerits of Stable coins

Prone to failure – Central point of failure

Stable coins like Tether, USDC are prone to failure since they rely on a centralized 3rd party company that keeps their fiat reserves and manages the token circulation. These have to be trusted by the investors yet trust is a detestable thing in the world of Cryptocurrency. There is a common slogan in the crypto space that goes like “Don’t trust, just verify.” When the centralized companies that hold the reserve currencies for stable coins are attacked, it’s an implication of losses to the investors’ funds hence the downfall/setback for Stable coins.

Basis which is one of the stable coins project shut down in December 2018 after having raised $100 million dollars.

Unprofitable – No ROI

Stable coins are not good for investment. For instance, investing $1000 in Tether where you buy and hold 1000USDT tokens for 3years can yield no profits to an investor. This is because Stable coins have a fixed price implying that regardless of any bullish market conditions they will always remain at that fixed price.

Centralization

We have trusted banks and governments for a very long time and we have seen the negative economic consequences including corruption, inflation just because of the manipulative tendency of the selected few individuals operating the centralized systems. Some stable coins are also centralized and this just retards the progress of other normal Cryptocurrencies such as Ethereum, Bitcoin, Steem..etc that are decentralized.

Dependence on the underlying asset

Stable coins such as fiat collateralized stable coins rely on an underlying asset value as a backup for their price stability. When the price of that underlying asset, let’s say the fiat US dollar fluctuates negatively, it certainly affects the price of the stable coin. Though fiat currencies tend to offer some level of stability, they also do fluctuate at some point due to the economical and political issues in the nation. Therefore pegging the value of a stable coin to such currencies, just keeps it in fluctuation mode.

Require some level of KYC

Stable coins like USDC are highly centralized and regulated. These require some level of know your customer which is something that undermines the aspect of anonymity in the Crypto space. Tether limited and USDC can freeze the crypto funds of some individual accounts in case they wanted to.

The high costs of running the management work of a central unity

Since stable coins tend to rely on a 3rd party company that keeps their reserve currencies. The 3rd party companies such as Tether limited, USDC spend some of their resources in facilitating external audits that ensure that their Fiat reserves correspond to the Tokens in Circulation. They have to ensure such statistics in order to build and maintain trust among the public users of their tokens. (Investors and traders)

Will stable coins dominate the future of finance?

One of the core purposes of innovating Stable coins was to solve the major problem of high Volatility in the Crypto Market. However, when Cryptocurrencies like Bitcoin, Ethereum and the rest become more stable in the future; I am envisioning those times when Crypto has finally gone mainstream; that leaves us a question, will stable coins remain relevant in those future times? Or will they still have the mandate of dominating the future of finance?

In conclusion, Stable coins are a very significant step towards mass Crypto adoption. If it’s a Crypto train that is on its long journey to its final destination, stable coins innovation is acting as the fuel for the Crypto train regardless of the criticisms and challenges along the way.


Homework task: Write about any one of the following Stable coins

  • USD Coin (USDC)
  • TrueUSD (TUSD)
  • Paxos Standard (PAX)
  • Digix (DGX)


Rules and guidelines to follow

  • Post all your homework articles in the Steemit Crypto academy.
  • Only Steemexclusive homework articles will be curated.
  • Your homework article should range between 300 - 1000words
  • Use an exclusive tag #yohan2on-week7 as one of your first 5 tags. You can as well tag me @yohan2on so that I can easily find your post.
  • Use copy-right free images and showcase their source.
  • Be creative and original in your articles.
  • Any borrowed content from other sources should be fully referenced.
  • Plagiarism and spinning of articles will not be tolerated
  • This homework task runs till 28/03/2021
Sort:  

Thanks professor @yohan2on I have attended your class successfully and here is my home work submission post

https://steemit.com/hive-108451/@chimezunem001/steemitcryptoacademy-or-stable-coin-part-2-submission-post-for-yohan2on

Hola @yohan2on. Aún no has revisado mi post de la semana 6, https://steemit.com/hive-108451/@prosperamente/crypto-academy-week-6-homework-post-for-yohan2on-stable-coins. Y el payout es en 10 horas!

Hello again @yohan2on, It's great to learn new things about stable coins. I enjoyed homework this week 7, so here's my submission about Digix.

https://steemit.com/hive-108451/@allbert/crypto-academy-week-7-homework-post-for-yohan2on-stable-coins-part-2

Hello dear sir. This task was really very interesting one . Here is my home work submission for week 7. Hope so that you will visit my post soon.

https://steemit.com/hive-108451/@steemlover63/home-work-week-7-for-prof-yohan2on-or-or-stable-coins-part-2-or-or-usd-coin

Thank you very much means a lot.

Greetings [email protected] hope you are doing great.please i just want to bring to your notice that my post has been voted on but not curated and this is the sixth day, please I will be grateful if you can look into it so as to avoid what happened in week6 where my post was not curated.Thanks and God bless.
https://steemit.com/hive-108451/@samuelj/steemit-crypto-academy-week-7-stable-coins-part2
@steemcurator01
@steemcurator02

Good afternoon prof @yohan2on, pls my post was scored 6 but haven't been curated for 6 days ago

Hello sir @yohan2on. Thanks for this wonderful lecture i have also attended the last week 6 lecture please check it when you are available.

https://steemit.com/hive-108451/@mohammadfaisal/crypto-academy-week-6-homework-post-for-yohan2on-what-is-tether


And sorry for the late submission but the reason is that i am very ill and it was very hard for me to write homework but i have tried my best to write homework.


I hope you will will check it soon.


Thanks!

Good day Professor @yohan2on. I have taken the lesson for week7 and attended to the homework task. Here is the link below:

https://steemit.com/hive-108451/@reminiscence01/homework-task-week7-for-professor-yohan2on-or-stable-coins-2-or

greetings professor my last week's Homework has been verified but didn't receive an upvote yet.
https://steemit.com/hive-108451/@bassamjamal/crypto-academy-week-6-homework-post-for-yohan2on-stable-coin-steem-dollars-sbd

Verified and curated

Hello professor @yohan2on please my week-6 home work has not been visited by you. Thank you as you rewiew it here is the link

https://steemit.com/hive-108451/@chimezunem001/steemitcryptoacademy-or-or-my-week-6-home-work-submission-post-for-yohan2on

hello professor, @yohan2on good to see you back here, my assignment number 7 is ready to be reviewed. note: Task 6 was not cured, but revised. why?

https://steemit.com/hive-108451/@laser145/steemit-crypto-academy-week-7-stable-coins-part2-for-yohan2on

Task 6 https://steemit.com/hive-108451/@laser145/steemit-crypto-academy-week-6-stable-coins-yohan2on :(

Greeting's to you professors @yohan2on my week-6 Post wasn't visited at all.

https://steemit.com/hive-108451/@kingcent/home-work-post-for-week-6-by-yohan2on-stable-coin-written-by-me-kingcent-powdered-up-100

This is the link thank you in advance.

Hello professor @yohan2on. it seems you forgot to give a review about my homework for week 6, here is my entry :
https://steemit.com/hive-108451/@zacky07/crypto-academy-week-6-homework-post-for-yohan2on-stable-coins-tether-usdt
Thank you.....

task 7 finished, greetings teacher.

https://steemit.com/hive-108451/@eulalia1202/steemit-crypto-academy-week-7-stable-coins-part2-yohan2on-eulalia1202

teacher I have a constraint, my last assignment was corrected but not cured, can you do something for me for this assignment?

my homework 6 that was not cured

https://steemit.com/hive-108451/@eulalia1202/steemit-crypto-academy-week-6-stable-coins-yohan2on-eulalia1202

teacher I have a constraint, my last assignment was corrected but not cured, can you do something for me for this assignment?

my homework 6 that was not cured @yohan2on

https://steemit.com/hive-108451/@eulalia1202/steemit-crypto-academy-week-6-stable-coins-yohan2on-eulalia1202

Good morning @yohan2on, please this post was reviewed but not curated and its already 6 days old.

https://steemit.com/hive-108451/@samsuccess/crypto-academy-week-6-a-study-on-steem-backed-dollar-sbd-stablecoins-homework-submitted-to-yohan2on

Please do something about it.

Wow....., Sir you made a great lecture here. And I made I participated in your task, but it has not been reviewed yet, I know you're busy doing other things. Anytime you're chanced you can check it out before the results are out. Here is the link https://steemit.com/hive-108451/@prolee/steemit-crypto-academy-week-6-or-or-homework-on-stable-coins-by-prof-yohan2on-or-or-written-by-prolee
Thanks Prof @yohan2on

Yes sir, you're right.
But still waiting for vote from @steemcurator02

Please, I forgot to put your name in the title of my previous submission, and I have made an adjustment: Here is my Adjusted Submission: https://steemit.com/hive-108451/@benie111/steemit-crypto-academy-week-7-task-stable-coins-part-2-for-yohan2on

This is a wonderful class. Thanks so much @yohan2on.

This is my homework link here.

Good day Professor yohan2on. You advised me to repost my week5 task that wasn't curated which i did. The repost is now 5days old after you reviewed it and it is still not curated. Here is the link below:

https://steemit.com/hive-108451/@reminiscence01/blbzy-homework-task-week-5-for-professor-yohan2on-or-decentralized-exchange-part-2-or

Thank you Professor.

https://steemit.com/hive-108451/@coro09/steemit-crypto-academy-week-6-stable-coins. Buenos días profesor @yohan2on aquí le dejé mi tarea para que por favor me corrija muchas gracias

Respected Professor @yohan2on, Great lecture as always.

Sir, you have not yet shared summary post of week 6. I am too much eager to know if my post has been in top 3.

Thanks.

my task 7 is finished
https://steemit.com/hive-108451/@dulce2/steemit-crypto-academy-week-7-stable-coins-part2-yohan2on-by-dulce2

teacher my homework 6 was corrected but it was not healed, is it possible that I can add the points so as not to lose that cure?

https://steemit.com/hive-108451/@dulce2/steemit-crypto-academy-week-6-stable-coins-yohan2on-dulce2

Greetings Prof @yohan2on thanks for this lecture/lesson, and with that I chose DGX and here is my take on that.

https://steemit.com/hive-108451/@misssj/steemit-crypto-academy-week-7-stable-coins-part2-dgx-digix-or-lecture-by-yohan2on

Hello Prof @yohan2on, it has been over four days and my week 6 post has not been curated yet, i will be deeply grateful if you can look into it once more thanks so much.

https://steemit.com/hive-108451/@samuelj/steemit-crypto-academy-understanding-decentralized-finance-part-2-topic-5

Hi,
Dear Professor @yohan2on
You are requested to have a look on my assignment task week 7. Here it is :: https://steemit.com/hive-108451/@eh-shohag/crypto-academy-week-7-homework-post-for-yohan2on

Thanks professor!

  • Here is the translation of this post:

LINK

sir i got 5 marks in my homework and no curation no upvote
what should i do

very good part of topic 2 of the stable coins teacher, I have learned a lot, here is my homework for week 7. greetings

https://steemit.com/hive-108451/@dairhial07/crypto-academy-week-7-homework-post-for-yohan2on-stable-coins-part-2-trueusd-tusd

greetings teacher my homework ¡¡blessings for you!!

greetings professor my
homewor week 7

Hello professor @yohan2on. Thank you for a Great lecture.
Here is the link to my homework.
https://steemit.com/hive-108451/@mohsinn/crypto-academy-week-7-homework-post-for-yohan2on

Hi Professor,
This is the link of homework task for week 7. Please check.
https://steemit.com/hive-108451/@md-raju/crypto-academy-week-7-homework-post-for-yohan2on

https://steemit.com/hive-108451/@kingcent/my-home-work-post-for-yohan2on-week7-writing-about-usd-coin-usdc-written-by-me-kingcent-powered-up-100

Hi professor @yohan2on this is my home-work Post for week7 .. you are free to review it now. Thank you very much in advance

sir last week my homework was not curated you gave me 7 marks on my post what should i do now sir please guide me

this is the post link

https://steemit.com/hive-108451/@akashhassan/steemit-crypto-academy-topic-6-homework-post-for-yohan2on-by-akashhassan

Respected Sir, Here is my submission for week 7. Kindly review it and oblige. Thanks

https://steemit.com/hive-108451/@mawattoo8/crypto-academy-week-7-homework-post-for-yohan2on

Greetings @ yohan2on I hope this is very good here is my homework for week 7. Thank you very much it was very interesting

https://steemit.com/hive-108451/@juanjo09/digix-gold-token-dgx-stablecoin-homework-week-7

Hi teacher, I hope you don't leave me out, my assignment is 2 days old.

Homework