After ten-plus years since Bitcoin was launched, we have seen some major players beginning to take both blockchain and cryptocurrency very seriously.
On a daily basis, we see household names such as Facebook and Amazon making moves toward adopting or at least acknowledging a crypto or blockchain strategy.
So, what does this mean for businesses that today are struggling to stay ahead of the game and maintain an edge in a market that is increasingly dominated by a handful of powerful players? The stablecoin space may offer an answer.
What is a Stablecoin?
Although cryptocurrencies have been adopted by some firms to support their ecosystems, their price volatility is a great hindrance to increased adoption. Stablecoins are a solution to the fluctuating rates of cryptocurrency prices.
There are three commonly known models that exist for stablecoins:
- A stablecoin’s value is pegged to a relatively stable asset like gold or fiat currency.
- A coin is pegged to the dollar/gold backing, but the coin’s value is maintained by being pegged to a fund of other crypto coins, essentially, spreading the role of stability across multiple coins in that asset class.
- Lastly, there are the purely algorithmic coins that are balanced by algorithmically expanding and contracting the supply of the coin based on market behavior.
Element Zero, a non-for-profit, has now introduced a fourth type of stablecoin.
Element Zero’s Stability Protocol is engineered to be not be impacted by market volatility; their coins are stable by having a fixed face value that is enforced by a two-way smart contract system. The stablecoins can only be traded for something of equal value, that may be in the form of an alternative crypto coin, goods and services or an invoice or receipt for goods and/or services. Then, the smart contract will balance out the transaction to provide an exact value match to whatever the transaction is for.
As a stablecoin platform, Element Zero provides a ways for any business or organization to develop and launch their own stablecoin, for free, a first of its kind that we’ve been able to find.
Benefits of Using a Stablecoin
Integrating stablecoins to business operations benefits businesses in the following ways:
- Controlling Cryptocurrency Price Volatility: Visibly, in the crypto world, several cryptocurrencies shed a huge percentage of their value; however, using stablecoins, a business may conduct transactions without the potential for losses due to the high volatility of value as we have seen with the more popular cryptocurrencies like Bitcoin and Ethereum.
- Enhancing Consumer Relations: Stablecoins for business help customers bypass several middlemen while trying to pay for products they have purchased. A business-specific stablecoin allows customers to pay directly with heavily reduced costs incurred by the customer or the business for payment processing.
- Value-addition: Business can build additional value into their stablecoin by way of reduced transaction fees for some sales, more detailed a validated reporting by way of the blockchain or any other number of features that will benefit the client-base.
- Customer loyalty: A business-specific stablecoin may offer tokens to customers as a loyalty program to consumers. This feature of the stablecoin allows you to attract and retain customers who can then redeem the tokens and access purchases more from the business, contributing to business’ growth.
- Industry growth: There’s a case for stablecoins that could serve multiple businesses in the an industry segment; say the fast food industry. In this way, the industry accesses simple remittance mechanisms for their businesses, with fast processing speeds, secure and no fees imposed on processing payments as the middlemen are cut off and currency is industry-owned.
Business-specific stablecoins are already gaining traction for various industries, facilitating new innovations like in the ridesharing industry. More businesses have developed their unique stablecoins to enhance their relations with customers and expand their operations.
Creating these coins is easy through innovations like the Element Zero Network stablecoin platform, which offers a host of features out of the box and provides a great tool-set for customizations. And in the future, we will see stablecoins taking over the ageing credit card system, which struggles to meet the demands of the digital age.
Stablecoin symbols reservations are open on Element Zero here