Crypto Academy Beginner's Level Week 4 Task 5: Stability In Digital Currencies
Importance Of Stability In Cryptocurrency
Cryptocurrency and it's blockchain technology is a wonderful innovation in our time and many believe that soon it will even taken over the traditional finance as we know today. Many believe that cryptocurrency is the future that will completely take over fiat currently some others feel that change is happening at the moment that in fact cryptocurrency is the "now" with countries like El Salvador already adopting bitcoin as a means of exchange, a legal tender and some of the biggest institutions buying in with a huge amount of greed.
Indeed looking at the design of blockchain technology and everything about it we would no doubt believe it should live up to it's billing, a feat of engineering technology and with so much expectations on the cryptocurrency by both the proletariat and bourgeoisie we could see why it will be of great importance for the crypto market to maintain stability.
The crypto market is a very violatile one that has the potential of enriching one in a short period of time and at the same time wreck havock and cause us to lose huge sums of money because of its high violatile nature, it's true this is somewhat the beauty of the crypto market but truth be told without stability i don't really see cryptocurrency completely taking over the traditional financial systems of the world. Yes we love crypto but in even the big game players who we can say are truly wealthy we always look for something to put there money which will maintain its value overtime unlike the drama of the crypto currency market.
Today many see the market as a place where we would just trade in and make profit and take out this profit because of the unpredictableness of the market, I mean a coin can 20× in a day only to crash 90% the next day. I tell you for such violatility and high level of instability of the crypto market, it would be very difficult for it to take over the traditional financial system and usurp the gold standard by becoming a store of value.
I truly believe that for our dreams to be actualised for us all who hope for blockchain technology and cryptocurrency to completely replace fiat then it must and should have a certain amount of stability. For the world to really accept bitcoin and cryptocurrency as a store of value then she must believe that it will at all time measure up to standards with less risk of drastically falling as we see today. I mean a green market can easily turn red the next day, the global financial system can't have that. So for this in all i believe it is of utmost importance that the cryptocurrency market maintains stability
My Take On CBDC's
The CBDCs is the digital form of a country's currency, it has the same value and usecase as the country's paper money, the only notable difference is that it is digital.
Personally i don't really know how it would be since it hasn't been implemented really but in plans, even china who is on it with their E-yen is still on the testing phase, i believe we should take a look at the potential pros and cons to gain a better understanding of how it will be and my take on it though i would love to believe it would come as a nice development in our world of technology.
Pros
Transaction Speed:For one i believe that the central bank digital currency implementation would increase transaction speed both on the local level and international level with just a touch we would have run a transaction
No Need for Any Financial Intermidiary
This E-currency would eliminate sucessufully any Intermidiaries in the financial institution such as west union, visa, paypal etc as we can easily carry out transactions ourselves anytime from any part of the world at easeLower Transaction Fee: Since the middle man is eliminated with the implementation of CBDCs it would therefore eliminate or drastically reduce transaction fee to a minimal level both for the wealthy and poor masses as well as for those who run big scale and small scale business
Cons
Centralisation:For all it's promises one notable bad side for CBDCs is that it is still centralised though digital which means the government and the bank like today still has power over our funds which for us who are into cryptocurrency a decentralized blockchain are not in for since we all dream for complete and absolute control of our asset without interferences.
Control Over Your Funds: The government also maintains control over how we spend our funds and have data of all our transaction and if found suspicious by them could also as usually easily cease or freeze our funds.
Hackable: Since it is digital and centralised with all it pins at the care of a central server it makes it easy target for hackers who could easily find their way through it and steal millions of people's funds which is bad for business.
Now after going through the pros and cons i for one is not really in for it. It is through because of its digital nature it makes provision for the unbanked population but even the unbanked wouldn't be happy with someone messing around with their privacy, i feel this is another way the government aims at controlling our funds through the promise of digital currency so they won't be left behind and the control they had is gradually slipping because of the emergence of cryptocurrency, to me it is bad for business to a certain degree ofcourse but not withstanding it couldn't replace blockchain technology and it's growth.
Rebase Token
A Rebase token is like the cousin of stablecoins in that just like stable coins rebase token is also aimed at maintaining stability in a rather violatile market.
A rebase makes sure the price of a token always goes back to it's intended price despite any fluctuations in the market whether in the upside or downside. This a kind of token which has an elastic supply to make sure the price of a said token maintains stability, which they achieve easily with it's elastic supply nature, let's say there is a price surge in the token we would see the supply greatly increases to push the price down and when there is a massive dip in price we would see the supply greatly reduced to keep the price at the level it has to be which is done with the help of their rebase mechanism, the more the supply the lesser the price and the lesser the supply the higher the price.
This is typically how rebase tokens works, they use their elastic supply nature to maintain the true value of the token no matter the price movement of the market either to the upside or downside their rebase mechanism ensures the token maintains an intended price or very close to it as the case maybe.
To illustrate let's say we have a rabase token as a case study let's say poocoin and let's assume it has a value of $100 and we hold 200 of the said token this we put our total poocoin value at $20,000 now if this token was to be rebase slightly by 1% and there is price increase in the token to $101 making our total value to be $20,200. Now to make sure our holdings maintains it original value of $20,000 there will be a slight correction in that the total supply will be slightly reduced to 1% to make sure our holding goes back to it's original value or the could reduce the everyone's holding by 1% so all together instead of 200 tokens we now have 198 tokens which when multiplied by it's current price of $101 will rightly give us our original value of $20,000. so that is pretty much how rebase tokens function it maintains stability in price with it's elastic nature despite the volatility of the crypto market almost acting like a stable coin.
Exploration Of Ampleforth
I went to the site Ampleforth.org
The data given to me from the above image from ampleforth dashboard will be used to calculate the rebase %.
The rate of the oracle = 1.003
Price Target = 1.061
Hence the rebase percentage will be calculated thus;
Rebase % = {[oracle rate - price target) /
price target] × 100} / 10
={[1.003 - 1.061) / 1.061] × 100} / 10
={[-0.058) / 1.061] × 100} / 10
={[-0.054] × 100} / 10
=(-5.4) / 10
= -0.54
Rebase %= -0.54%
Now having gone through the calculation for the rebase percentage i also saw some exciting features on ampleforth.org dashboard which i took note of like:
I saw the price chart for 90 days, from which i saw this;
High= 1.77
Low= 0.86
Average= 1.0
Median=0.96
I went further too and also took notice of this👇
I also saw the supply chart for 90 days and saw this data:
High= 200.26m
Low= 117.17m
Average= 161.89m
Median= 166.60m
I also saw a the market cap chart with a high of 333.80m and a low of 110.36m, averaging 162.89m and a median of 159.13m
Trade A $15 Worth Token On Binance
Well to begin i launch my binance app and quickly went to trade and open up a market order to sell solana of 0.12 worth $18.94 which activated at once, proof of transactions below
A market order of 0.12 solana which activated at once for $18.94
My binance transaction history as proof this transaction was activated
Transferring Same Usdt To Another Wallet
Well to do this i go to my usdt and open it up, click on withdraw and i would want to send it to my Huobi-pro wallet.
The balance of usdt in my Huobi-pro wallet is $0.47 before the transaction so i copied the trc-20 wallet address and go to my binance on the withdrawal page and put it there.
When i did the system recognize aromatically that the address is a trc-20 address i input the amount am sending which was $18.94 and was notified i was going to receive only $17.94 because $1 will be the transaction fee i accepted and submitted the withdrawal.
It went through, successfully then i received an email from binance notifying me about of a successful withdrawal then i head over to my Huobi-pro exchange and saw it.
As you can rightly see depicted on the image i received the usdt and my balanced changed.
Now there are some advantages i noticed over this transaction in comparison with running a fiat money transaction and some of it are.
Faster than when running a fiat transaction
No third-party
could be run by anyone from any part of the world with relative ease compared to some stress associated with running a fiat then
The use of tron network trc-20 ensured a smaller transaction fee of $1 compared to what we might pay if we have to go through Intermidiaries
More secure and relative privacy
Conclusion
I really do feel cryptocurrency will easily take over the traditional financial system in a matter of time. I do believe that the government knows this that is why some are backing it up and accepting it as a means of exchange like El Salvador others are banning it and see it like threat like china while others claim not to be interested in banning it neither do they show massive support like usa. So generally they have divided views both i for one believe a time will come when they can't help and with blockchain continuous revolution i believe is only a matter of time before it becomes what we crypto enthusiast know it will be an acceptable legal tender and a store of value hopefully if its able retains a measure of stability in the future. But generally i feel cryptocurrency is here to eliminate fiat money and make a truly decentralized provision for the unbanked unlike the CBDCs which is still flawed with issue of centralisation