One of the major issues for cryptocurrencies continues to be price volatility. Several coins lost a huge percentage of their value since the industry’s bear run beginning in March 2018: Bitcoin (BTC) alone shed over 70% moving from all-time high about $20,000 to its current $5,260, sometimes reaching $3,100 (December 2018). Huge fluctuations of value lead not only to unprecedented losses to a business, they also create uncertainty in the crypto marketplace. Couple these mixed results with negative press in the consumer media, it’s no surprise that the adoption of cryptocurrencies in the current financial landscape is slow.
However, we also see some signs that major players are entering the cryptocurrency market. In the past few months, Facebook, JPM Morgan and Amazon have announced moves toward adopting or at least acknowledging a crypto or blockchain strategy. This is a signal to businesses that cryptocurrencies are becoming more mainstream and it’s time to focus on how to integrate a stablecoin strategy.
Understand Stablecoin’s Backstory
Price volatility – and the associated risk to business – continues to be the biggest barrier to widespread adoption, and that shouldn’t come as a surprise if you understand what secures each stablecoin. Currently, there are three methodologies by which coins are valued. First, the value of the majority of coins in the market are tied to fiat currencies or gold, which means their value rises and falls with these assets. In essence, they are “centralized,” meaning their value is still controlled by governments or banks. In the second method, the coins value is tied to a fund of other crypto coins, which spreads the role of stability across multiple coins. The third method uses algorithmic calculations to adjust coin supply based on market behavior.
Our company, Element Zero Network, conducted extensive research into these methods and determined that for a coin to be truly stable, it must have a fixed face value that is enforced by a two-way smart contract system. To accomplish this, we created the Stability Protocol Methodology, which eliminates the possibility of any volatility in the first place. The contract balances out the transaction so that value remains stable. By making our platform available to all businesses, organizations or governments, all can benefit from the Stability Platform Methodology.
Create added value with your own stablecoin
When a business chooses to issue a stablecoin on the Element Zero platform, it’s providing value not only to the company, but to the customer as well:
- Maintaining Price Stability: A business can conduct crypto transactions without worrying about potential for losses due to the high volatility of value.
- Creating Customer-centric Relationships: A business-specific stablecoin allows the business to create a one-to-one relationship with the customer, improving its customer relations. In addition, businesses using their own stablecoin can tailor features that directly benefit their user base, from reviews to detailed tracking management.
- Value-addition: By eliminating the middleman in the transaction, a business can reduce fees and realize more revenue.
- Customer loyalty: A business can offer tokens to customers as part of a rewards program, which can support the attraction and retention of customers, contributing to growth.
- Industry growth: Creating a new method of payment that reduces costs and provides ways to enhance the customer-company relationship will help encourage health competition.
As more businesses recognize the value of a stablecoin economy and become more educated about the underlying platforms on which the coins are supported, stablecoins will become a readily accepted payment form. But success will come to those who choose the right platform on which to build their stablecoin program. Choose wisely and remember that volatility is the largest risk, which can be eliminated on the Element Zero Network.