Other stablecoins are pegged to the price of crypto assets like Ether or a group of digital currencies. And like any asset, digital or tangible, there is the risk of secondary-market manipulation which could skew coin values and threaten to break any underlying peg. Collateralized stablecoins run a risk of fraud, that the reserves they claim are backing the asset are fictional. Stablecoins can be a bridge between two worlds that weren’t designed with mixing in mind -- cryptocurrencies and traditional finance. By Matthew Leising and Olga Kharif | Bloomberg April 17 at 11:21 AM One of the biggest hurdles facing digital currencies is their extreme volatility.
One of the biggest hurdles facing digital currencies is their extreme volatility. Bitcoin once dropped from nearly $20,000 to around $6,000 in four months -- a range of price swings that makes it nearly unusable for real-life transactions. For some, the answer is a stable cryptocurrency, or stablecoin. The best-known example, Tether, has been trading since 2015. But stablecoins are about to go mainstream. Facebook Inc. is working on one for use inside the social network’s WhatsApp messenger, while JPMorgan Chase & Co. has developed a coin to speed up payments between corporate customers.
1. What are stablecoins?
Digital assets sometimes referred to as coins, sometimes as tokens, that are designed to keep their value. That is, to experience only the milder kind of volatility seen in traditional currencies. Tether, for instance, always trades for about $1.
2. How do they do that?
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