Crypto-Currencies as Medium of Payment

Suggested Duration: 2 to 5 minutes

BitShares Blockchain Foundation posted an article highlighting the benefits of a stable digital token as a medium of exchange.

A well-known obstacle to greater adoption of crypto-currencies like BTC as a medium of payment is the high volatility of its exchange value, due to its limited supply. As a consequence, the unit price varies (sometimes significantly) over short periods of time. This makes BTC unpractical for merchants that need to pay their suppliers in cash - especially in bearish markets where this currency risk can ruin a business.

The article then goes on to highlight three concepts that maintain a peg.

1. Asset-backed Peg (e.g. USDT backed by an IOU)
2. Liquidity-backed Peg (e.g. NuBits backed by BTC)
3. Market-backed Peg (e.g. bitCNY backed by BTS)