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High interest rates signal big things for Ethereum's future

In the past month, the price of Ethereum has been rocketing up while Bitcoin has been on the decline. Most of us are asking what’s going on here and why this might be happening? As we take a look at the current market, it seems that there are two primary forces at play. On one hand, we have rising interest rates around the world and on the other hand, we have major governments looking to implement blockchain technology into their current infrastructure. With all of this in mind, there’s certainly reason to believe that the value of Ethereum could rise even higher in 2018 than it did in 2017!

High interest rates signal big things for Ethereum's future

What are stablecoins?

A stablecoin is a digital currency pegged to a fiat currency, like the U.S. dollar, that doesn't experience wild fluctuations of value (either up or down). Stablecoins are important because they're used to avoid holding assets in other cryptocurrencies with unpredictable values.

 What does this mean for Ethereum?

Stablecoins as an investment

Considering high-interest rates on securities and deposits, many investors have opted to change their strategy. A new trend has emerged in the form of stablecoins. Stablecoins are digital assets that are pegged with traditional currencies such as the US dollar or euro. This helps to alleviate inflation and potential volatility that comes with cryptocurrency. One of the most popular examples is Gemini Dollar (GUSD) which is pegged to the US dollar, backed by cold storage reserves, and subject to FDIC regulation like a regular bank account.

What does this mean for Ethereum

How stablecoins can help Ethereum

One of the key selling points of Bitcoin is that it has very low volatility, meaning that prices don't fluctuate much. This would be difficult to replicate in Ethereum because its value changes based on how many people are buying and selling it. However, stablecoins offer a new way of holding onto Ethereum while still not losing its worth because they're backed by more stable assets like fiat currency or gold.

How stablecoins can help Ethereum

A critical look at stablecoin models

Stablecoins are cryptocurrencies with a fixed value, relative to fiat currencies like the U.S. dollar, writes Time. Instead of focusing on increasing their prices in order to generate profits, stablecoins have a static or low volatility value. The most commonly used model is the pegged crypto-coin, which ties its value to an external currency like the US dollar and gold.