Are Stablecoins A Necessary Evil?

[powerman24]

It seems that stable coins are very useful for trading and for merchants to avoid high volatility of crypto. I am not confident of the backing mechanism of stable coin which are centralized like Tether, and prefer decentralized solutions like DAI.

[cr197]

The best decentralized approach would be what BitBay.Market is trying to achieve.

As far as I know 99.99% of stablecoin projects think they have to be hard-pegged to a currency or commodity.
They don't. And this is their biggest weakness.

If anyone trades forex, they will know that the dollar value is not hard pegged. Its value is dynamic. The only difference is that it exchanges within a low volatility market. This low volatility is to a point where people are willing to accept it as a medium of exchange. A 5 dollar burger is still a 5 dollar burger at a restaurant, even if on a bad day in forex, the dollar possibly loses over 1/2% in value against gold or the Euro, etc.

Therefore the most robust stablecoin is one that tries to establish itself as a decentralized cryptocurrency that's value is independently determined. Bitcoin can already do this except it most likely has years even possibly decades  before it will ever become stabilized enough to be considered a medium of exchange.
So the only real step bitcoin is missing is a way to stabilize it's price. Paul Donovan, chief global economist of UBS, said it best back in an interview published in Nov. 2018, "Every economist knows a store of value is about balancing supply and demand, and with cryptocurrencies you cannot control the supply in response to a drop in demand."

And he nailed it on the head! While he was trying to be a smart ass about the future of crypto and why he thinks it will fail, he also provided the solution to fix the rampant volatility in the industry.
This is programmable money, never underestimate what can be hard coded into a blockchain - never say never.

BitBay.Market will be the first cryptocurrency that will solve this. Rather than complicate itself with hard pegging itself like 99.99% of others are doing. BitBay is simply applying a decentralized peg protocol that will allow coin holders to vote to freeze or unfreeze the total coin supply. Each coin has a memory, and can either be a liquid coin or a reserve coin depending on the voters consensus. This way it doesn't have to print new coins or burn existing coins. It simply takes the majority consensus and freezes or unfreezes the liquid supply so that it can "balance with dynamic demand". BitBay will prove Paul Donovan wrong.
This means price is not hard pegged. It can reach new values and hold these values. And why not? Pegging a stablecoin to the dollar, which has been steadily losing value since God knows how long, doesn't make any sense. If anything, decentralized cryptocurrencies that have a limited supply with or without regulated inflation should always be able to gain in value against fiat as long as demand growth is constant.

Will the price be volatile? In the beginning most likely, yes, it will. But over time, the ability to balance supply with demand should keep trade ranges contained with a minimal amount of volatility.

How is this possible? Bitcoin can take anywhere from 1-2 years for a bear market to end. With BitBay, voters can freeze roughly 80% of the total liquid supply in just 8 days! It would be hard pressed for a bear trend to last longer than 8-12 days at most. Some traders wouldn't even call that a trend, just a hiccup!

When investors can fight back against speculators, they have much more incentive to want to invest and stake which pushes out the volatility speculators so love.

There are many goals for this decentralized peg as I've already states some above, but one other major goal is to create a low-volatility coin is always independent of any other coin, currency or commodity.
Voters have the power to create either a positive or a negative correlation to bitcoin's price action. This could allow BitBay to be used as a volatility hedge against bitcoins price action. But people must remember also that since BitBay is not hard pegged, the profit potential does not stop once a trader hedges. For example, if bitcoin goes up in a bullish mini trend, but then traders feel that it could retrace, they now have 2 options: either sell their btc for a hard pegged stablecoin or sell their btc for BitBay. If they choose the former then for the most part, their ability to continue to increase their equity is done (unless they have access to margin trading and short). If they chose BitBay, their is the 'potential' that the new demand for BitBay from btc hedgers could actually cause BitBay to go up in value against BTC. This way they have the potential to continue profiting on top of their btc profit taking! There is risk obviously since nothing is guaranteed. But remember if any losses get out of control with BitBay, then voters will start freezing to protect their equity!

It should make for one hell of an interesting trade game.

BitBay.Market is just about 2-4 weeks away from presenting the decentralized peg to exchanges to test and integrate. The coding is done, it's been done since Nov. 2018.  They just have to finish up the exchange integration coding.

Hope this helps some people open up their eyes to some of the possibilities that are about to enter the industry!

[South Park]

A stable coin is something that we need to measure the cryptocurrency with fiat value.
But too much stable coins is not good, because some of them maybe turned to be a scam coin.
There is no profit from holding stable coin, so it is not necessary to be created more of them.

That is false, we can compare and trade cryptocurrencies directly against fiat so stable coins do not serve that purpose as you claim, however it does not mean that stable coins are useless, they have their function since they allow you to get something similar to fiat without using banks, but as we have seen during the last week they have the same weakness as fiat in which you need to trust a third party to hold the parity between the coin and fiat, and that is a huge weak link that cryptocurrencies were supposedly trying to solve.

[rjp55]

They have a place in crypto. I can't say evil but they are not an investment.

They are just a way to trade.

[premiumproductss]

Fiat-backed, the problem is with the word "FIAT".
Cryptocurrencies were created to fight with FIAT money. FIAT is an evil that infiltrated cryptocurrencies and try to dump them all  .