Stablecoins

[Salauddin1994]

Stable currencies are the policies adopted by the financial authorities of a country to ensure economic development and stability of a country which ensures and regulates the money supply to the economy of the country. Monetary policy controls interest rates and money supply to control the country's inflation increase employment and ensure economic growth. A country's central bank or any independent institution formulates monetary policy as a financial authority stable currencies usually have their prices confirmed in advance. In that case, the difference between price increase and decrease is very small.

[l3pox]

Stable coins are only a relative term. Stable coins, in theory, must be backed by something considered widely as stable asset, like fiats, golds, and any precious things. Unfortunately, fiats, gold, precious things are not truly stable. They are usually stable but sometimes, they are volatile like what we see price of gold. Fiat currencies are a big joke, and they are only stable on the paper desk, in theory. In countries with hyperinflation, fiat currencies are not stable. One fiat currency is stable today but it will be a trash paper next 6 months.

No fiat currency is stable today, even dollar is not stable.
Also, you have said the reason why stable currencies can not be backed by fiats, gold or any other stock.
Stable currencies are not fiats or gold or any stock and cannot be backed by them, they are like unstable currencies that are not backed by anything, only difference are the prices that are not volatile but relatively stable. Stable currencies should not be backed by anything than increasing or decreasing in the stable coin supply in relation to the demand and selling of the the stablecoin in a way to maintain relatively constant price.

nothing is stable.
period

but sometimes OP or anyone may want to have a currecny that's closer related to their country fiat currency, nothing wrong with that.
it's not a good idea to have 100% of your assets in BTC or crypto because of the volatily, better to have at least some amount in fiat or some currency you'll need on day-to-day

[Negotiation]

Stable currency The central bank or financial authority regulates the supply of coins and paper money considering the economic condition of the country. If the central bank thinks that the supply of cash to the economy needs to be increased, then the central bank supplies money to the economy through the printing of new metals and paper and commercial banks. This increases the supply of cash in the market. On the other hand, if the economy needs to reduce cash flow, the central bank withdraws coins and paper money from its member banks. However, as a result of inflation, the demand for a stable currency decreases.

[hd49728]

Hello

I have a question about stablecoins and how they work.

Say I want to build a crypto wallet. Now, it's not an exchange, it's a wallet, but I want to give my users the ability to trade it in-wallet.

Here's where a stablecoins comes in. Now, presume he sells $1,000 worth of BTC for a stablecoin that I issue. The stablecoin is $1. Now assume the price of BTC drops by 50%.
That means, he can buy 50% more satoshis with the same $1,000, but since I don't have any BTC reserves, how can guarantee the "stableness" of the coin?

Are there any solutions to this such as offshoring this a decentralized exchange?

Thanks!

How do you back your stable coin (with a kind of asset, fiat, precious metal, etc.)?

From what you disclosed, your stable coin will have a value at $1 for one coin. It is same as many other stable coins.

[UPDATED] PSA: Most Stablecoins Can Be Frozen, Even in Your Own Wallets
Top 10 stable coins of 2020

[UmerIdrees]

Here's where a stablecoins comes in. Now, presume he sells $1,000 worth of BTC for a stablecoin that I issue. The stablecoin is $1. Now assume the price of BTC drops by 50%.
That means, he can buy 50% more satoshis with the same $1,000, but since I don't have any BTC reserves, how can guarantee the "stableness" of the coin?

100% not 50%


This stable coin is a scam. You cannot create money out of thin air.
Your stable coins must be backed by your reserves.
In simple words, when you issue 1000 dollar worth of stable coins, you must keep 1000 real dollar in reserve.

The question arises that why we need stable coins ? The answer is that we need stable coins because there is no real USD in the exchanges. That's why we see few stable coins which are backed up 100% by dollar (In theory). Practically they are not backed up 100% and hence it is unsafe to keep our funds in those stable coins.

[nelson4lov]

Hello

.

Here's where a stablecoins comes in. Now, presume he sells $1,000 worth of BTC for a stablecoin that I issue. The stablecoin is $1. Now assume the price of BTC drops by 50%.
That means, he can buy 50% more satoshis with the same $1,000, but since I don't have any BTC reserves, how can guarantee the "stableness" of the coin?

Are there any solutions to this such as offshoring this a decentralized exchange?

Thanks!

Ideally, this would only work if you've bitcoin reserves to backup the stable coin assets.  Let's say things happen like in your example (bitcoin dumping 50% when the user already converted $1000 worth before the dump). If he decides to rebuy btc, that means he would have 50% more bitcoin so you should have reserves in place otherwise, it won't make much sense to offer such services inside of a wallet but could be a welcomed feature if you get it working since currently, one can only use stable coins via centralized exchanges.