Stability in Digital Currencies- Steemit Crypto Academy- S4W5- Homework Post for @awesononso

QUESTION 1
Explain why stability is important in digital currencies

Stability in Digital Currencies

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Let me first of all begin by explaining what the stability is all about before going into details on the importance of the stability of the digital currencies.
Stability in digital currencies is a scenario in which we see little or no fluctuation in the prices of that particular digital currency.

It is quite an interesting aspect that was brought upon. The stability in the digital currencies comes with the interesting fact in that its prices are either pecked at a single value or it is made in such a way that it value ranges in a very small minute range.

The importance then of the stability in the digital currencies is that it helps greatly in purchasing another currency in trading. Since it has a fixed value at all time you can quantity what you what to purchase at any time solely because it is unaffected by the laws of demand and supply.

Another great importance I will be talking about is the fact that since the digital currency can be used at any point of time. We see that since it has a fixed value, it can be store of wealth. One of the man aspect of the storage of wealth is that it should not depreciate, and since the stable digital currencies does not depreciate it is a true storage of wealth.

QUESTION 2
Do you think CBDC’s would be good in the future? Weigh the pros and cons in your own understanding and state your position

Will CBDC’s be good in the future?

I believe so much that the central bank digital currencies will be good in the future. There are so many facts which I will be using to back up my answer on why I think the central bank digital currencies will be good in the future.
When we look at the various advantages of the central bank digital currencies such as the

• Being legally backed which one of the major advantage of thee cdbc, as the cbdc is legally banked by low or the government

• And being inclusive in the unbanked system
  
  
  And the disadvantages of the central bank system such as

• Lack of privacy which is one the main reason why investors embark on the cryptocurrency world

• And the biggest of all, is it being by issued by central banks which makes it centralized.

When we take a view at the advantages and disadvantages we actually see that the disadvantages weighs more in winning.
Buy the central bank digital currencies has to be unique In its own way meaning that it must not necessarily follow the ways of other crypto currencies;
So concluding I believe its unique nature will actually propel in the future.

QUESTION 3
Explain in your own words how rebase tokens work. Give illustration.

How Rebase Token Works

I will begin by defining what the rebase token is before going into details what the rebase token is all about.
The rebase token is a token type which is designed in such a way that the circulating supply of the token either increases or decreases automatically according to the fluctuation of the prices of the token. Examples include YAM, RMPL, BASED and AMPL

Now let me explaining how the rebase token works.
I will be illustrating the using the yam token. The rebased uses protocols in which routinely schedule the prices every 24 hours.

The YAM token

The main function it does is that if the prices goes above a certain value to say $2, then the circulating supply will be expanded in the action of the recase. With this action, we see that the value of each YAM token will be reduced. Also, if we have the prices goes below $2, this means that the reverse of what happened up will now take place. The current supply of the rebase reduced which will now increase the value of each of the YAM token.

This actually follows the law of demand and supply perfectly. As we can from the illustrations above.

QUESTION 4
Check the necessary parameters and calculate the rebase %, what else can you find on the page.

Calculating the Rebase Token

I will be using the formula below to calculate the rebase token.

Rebase% = [((oracle rate – price target) / price target) / price target * 100] / 10

• Oracle rate = $1.021
• Price target = $1.061

Using the formula above, we have;
Rebase% = [((1.021 – 1.061) / 1.061) / 1.061 * 100] / 10

-3.77 / 10

= -0.37%

Other Parameters

We have information such as

• Price
• The supply chart
• Thee market capitalization
  This is as shown in the screenshot below.

QUESTION 5
Trade some tokens for at least $15 worth of usdt on binance and explain your steps.

Trading the TRX Crytocurrency

Step 1

I will be purchasing the usdt using the trx cryptocurrency. I begin by loging into the binance exchange and clicking on the market section.

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Step 2

I then search the trx/usdt cryptocurrency pair and input the amount of tron I want to sell and the amount of usdt will be shown. I will be using the limit order. This is explained in the screenshot below.

Step 3

We can see my purchased usdt below.

QUESTION 6
Transfer the usdt to another wallet with the tron network. From the transaction, what are the pros of the stablecoin over fiat money transactions.

Transfering Usdt from Binance to Poloniex

I will be transferring the usdt from the binance exchange to the poloniex exchange. I begin by entering my wallet and choosing the usdt which I will copy my usdt wallet address in the poloniex exchange while selecting the trc20 network.

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I then input the amount of usdt and confirm the transaction.

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Pros of the Stable Token

The stable token has lesser transaction fee. We see just $1was being charge for the transfer.
For the other token types the transaction will always vary, while with the stable coin, the transaction fee I already fixed.

Conclusion

We have seen the stability in the digital currency with its importance as it helps quantify other crytocurrencies as well. We have also seen the central bank digital currencies with its pros such as it is being backed by the legal authority and the cons such as it being portrayed with a centralized nature.
We have also seen the rebase token as how it functions with practical example In calculation. Through binance, I have demonstrated a real trade to show the advantage of using the stable cryptocurrencies.

@awesononso