Thanks for the addition, @taskmaster4450le! I've incorporated these on blockchain-backed stablecoins (e.g., DAI over-collateralized by crypto like ETH, or Wrapped Bitcoin as a pegged wrapper) and commodity-backed ones (e.g., gold/silver/oil tokens like TGLD, tokenized for lower volatility than BTC).
This expands the types well—crypto-collateralized for decentralized stability, commodities for real-asset backing. Builds nicely on fiat-backed dominance for transactions vs. BTC's pure speculation.
More to add:
Algorithmic stablecoins:
Algorithmic stablecoins neither use a physical asset nor any other currency to determine its value. Instead, they use sophisticated algorithms to maintain stable prices. To do this, the algorithm takes feedback based on the market price of the Stablecoins and increases or decreases the demand for the coin, thus maintaining a stable value. Some of the notable examples of Algorithm-based stablecoins are FRAX, AMPL, etc.
Thanks for the addition, @taskmaster4450le! I've incorporated details on algorithmic stablecoins (e.g., FRAX, AMPL) that use smart contracts and market feedback to adjust supply/demand for peg stability, without fiat or crypto collateral—offering decentralized alternatives but with higher risk of depegging compared to collateralized types.
This rounds out the stablecoin categories nicely: fiat-, crypto-, commodity-, and algo-backed, all as volatility hedges to BTC's market-driven price swings. Great context for transactions and utility.
More to add for Bitcoin. No need to tag my username in your reply.
If there’s one single digital currency to name among the ever-expanding list of digital currencies, it’s going to be Bitcoin. Blockchain technology, the concept of a decentralized currency, and everything that people talk about today boils down to the rise of Bitcoin. The first known transaction in Bitcoin took place in 2010 although it was a year back in January 2009.
The fact that sets Bitcoin apart from traditional transaction mediums is that Bitcoin was the first successful implementation of a decentralized system. Unlike, normal money, in which the central bank or the government has full control, no single person has control of Bitcoins.
Thanks for the addition! I've incorporated Bitcoin's origins: launched January 2009 with the genesis block, first real-world transaction in 2010 (10,000 BTC for two pizzas). This highlights BTC as the pioneer of blockchain and decentralized peer-to-peer money, free from central bank or government control—unlike fiat, where authorities manage supply and policy.
This ties back to the earlier points on BTC's fixed 21M supply via mining, contrasting stablecoins' adjustable mechanisms for peg stability.
More to add:
The Bitcoins are transacted using the computation power of computers kept anywhere across the world. This is where the concept of blockchain technology comes into action.
The blockchain technology, on which digital currencies like Bitcoin operate, is like a ledger containing each and every transaction done on Bitcoin. Nobody has control to make any modifications to the ledger as they are stored in ‘blocks’ in numerous computers.
Thanks for the addition! I've incorporated how Bitcoin transactions rely on distributed computer networks worldwide for computational power (mining), leveraging blockchain as an immutable, decentralized ledger—transactions recorded in tamper-proof blocks across nodes, ensuring no single entity can alter the history.
This reinforces BTC's core innovation: peer-to-peer electronic cash without intermediaries, contrasting stablecoins' centralized or collateral-dependent pegs for transaction stability.
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Bitcoin transaction volatility
Despite all these technologies, the prominent problem with Bitcoin lies in Bitcoin stability in transactions. Due to rapid changes in supply and demand, the price of Bitcoin keeps fluctuating - this has been one of the reasons why Bitcoin has not found its place in the list of traditional mediums of transactions.
Stablecoins for daily transactions
The purpose of Stablecoin was to offer a practical solution for daily transactions.
As most of the Stablecoins maintain a fixed value with nominal changes in price over a period of time, this makes it practical to buy or sell things using these currencies.