In this article, I explain what is a stablecoin. It’s a quick and easy read.

What is a stablecoin: 6 Features

Stablecoin, as the name suggests, is a cryptocurency which is relatively stable
The relative stability is there because stablecoin is backed by a relatively stable asset
- That asset can be a fiat currency or commodity. For example US dollar or gold / silver
- For example, tether is a well-known stablecoin which is backed by the US dollar
A stablecoin is backed by a fixed amount if that asset
- For example, every tether is backed by 1 US dollar
- So at any point in time, 1 tether should equal 1 US dollar (Screenshot #1)
- In the last year 1 tether had a price between 0.98 and 1.02 US dollars, which IS very stable (See Screenshot #2).

Screenshot #1. Tether price on April 27, 2020

Screenshot #2

4. Now, at any point in time, the value of a stablecoin depends on the value of the asset backing it

- For example, at any time the value of tether depends on the value of the US dollar (which changes relative to other fiat currencies and commodities)

5. For every stablecoin issued, there should be a certain amount of that asset in reserves

- In the case of tether, for every tether in circulation there must be 1 US dollar in reserves

6. If you own a stablecoin you should be able to redeem it for the asset backing it

- For example, Tether company should give you US dollars for your tethers upon your request

Stablecoin backed by fiat currency vs gold

Above I mentioned that a stablecoin can be backed by a fiat currency such as the US dollar or a commodity such as gold.

Of course, on the long-term, gold is significantly more stable than the US dollar.

That’s because gold is a tested store of value while fiat currency holds only a temporary value.

Therefore, a stablecoin backed by gold should be more stable than a stablecoin backed by a fiat currency.

This brings me to unival (UNV), a stablecoin launched by Karatbars International.

UNV or unival is basically virtual gold.

That’s because UNV will be tied to a fixed value of gold (0.1 gram) once it goes on the blockchain.

When does UNV go on the blockchain?

Karatbars plans to put UNV on the blockchain in June of 2020.

Here are several exciting possibilities for those who will hold UNV in the future:

Redeem for physical gold
Receive a residual income on transactions involving every UNV:
- Once UNV is on the blockchain, according to Karatbars, you should be able to follow your UNV and earn commissions on the transactions of each UNV, indefinitely!
- That’s something completely new and sounds too good to be true! Well, it seems like it IS true. We’ll see how it goes. Should be big.
And more

I’ll publish more on the UNV in the coming week. Subscribe (on the left) to receive updates on this stablecoin.

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At this point you should have a pretty good picture of what is a stablecoin and its characteristics.

If not, let me know your question below 🙂

References:

www.cryptocurrencyfacts.com/what-is-a-stable-coin/

https://coinmarketcap.com/currencies/tether/

https://en.wikipedia.org/wiki/Stablecoin