Upon reading this Deutsche Bank analysts' stablecoins' article, I kept asking myself about the safeness of those digital currencies.
They told that around 70 percent of stablecoins are failing, and that could be alarming. Speaking of the stablecoins, I ought to say that they're the beacons of order in the sea of storms in crypto industry, aren’t they?
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Well, if the bridges are not that safe, then what is the point?
The research they did sought after all monetary pegs dating from the 1800s. They finally realized that they ended up in almost no good by them. The vast majority perished, and those that did were considered by their peers to be credible, had reserves, and had tight controls which only allowed growing the economy in a planned, controlled manner. It's the same way as having a solid base for home building – without such, one may not have a strong foundation for their house. Nothing would be better than base.
The mentioned examples included TerraUSD and Luna, which were the first stablecoins. It was a one-to-one swap at that time, they were meant to maintain the parity but they lost it, it gave people a tough time and they all ended up losing a lot of money.
However, that makes me feel nervous, and I'm really one of those people who have invested in the stablecoins to prevent the market fluctuations of regular cryptocurrency.
As a result, Tether ranked as one of the most famous stablecoins to come under the danger radar of the study. They reported that is was not properly transparent and mostly based on speculation. It is just like tying to create a castle by using a sand however, that house will be pretty at the beginning, but in the end, it will crack because of its shakiness.
Yet Tether didn't just accept the criticism, they stood strong and took the arguments head-on. They were dissatisfied with the report which they felt was not proof enough.
It's kind o like the thing you get when you're failed on an exam and then you try to convince the teacher that he's wrong . However, you may have to come to terms with the fact that you ended up on falling on your face.
The researchers singled out pegged currencies because they have similarity with the stablecoins though those are not employed for the same purpose. The fact that they discovered that up to half of them went bankrupt and the short term (around 8-10 years) operation of the rest was the major findings of their work. It is like the game of Jenga, one slight error will finally lead to a collapse and there is no need to wait longer.
What can be summarized in stablecoins’ case is that. . . . . The second one, it is worrying.
We need to be precautious. This gives a wrong impression that if it is a stablecoin, then it means a stable asset. We need to filter the name aside and see what features it is granting us.
I will probably be more careful when it comes to running a stablecoin portfolio. Well, they always appear safe and the most preferred option, nonetheless, the future in crypto is unknown. If history gave us a lesson, there’s one very important thing that it taught us: the unknown.
It is always wise to thoroughly research on different sources which will help you make an informed choice. Don't mindlessly stray behind the crowd and count your cents to buy an opportunity that requires you to pause and carefully think about where you are putting your money in.
In a word: Is there some degree of stability in stablecoins?
I have some doubts now. However, I must admit the fact that I would definitely be more careful with my budget from now on.
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Hello, I just want to say that No even FIAT money is safe, you can get your bank account frozen at discretion of the bank and governments and you can do nothing.
And that the sentence TerraUSD and Luna, which were the first stablecoins is wrong. Both coins emerge in 2019, years after stablecoins surge.
Your right on the first paragraph and thank you for the correction.