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Greetings dear Steemians, <br>
I am most delighted once again to be in attendance in this weeks lecture. I have been able to read through the lecture delivered by professor @awesononso and the lecture was well explained by the prof. He based this weeks topic on Stability in Digital Currencies. Let's explore the assignment given by the prof together as I take you on a ride through my blog.
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1.) Explain why Stability is important in Digital currencies.
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Crypto currency from the very beginning was design to be volatile, as the time goes on, the need for a stable coin became very necessary die to too much fluctuation in the price of asset. Now due to this fluactuation the need for stable coin was established. Stable coins are digital coins or currency which are designed to have their price pegged to a real world asset. As we know clearly our normal fiat price is fixed that means it does not change, that is the same idea that the stable coin is coming with. So stable coins are coins that has little or fluctuation in it's price. Example of stable coin is USDT.
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Importance of the stability of digital currency
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- <b>Easy to trade:</b> Among all the digital currency present in the world today, the once that are more easier to trade is the stable coin. The reason is that most people prefer it because of the fact that the price of the asset is stable and it is pegged to a real world asset.
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- <b>No fear of loss:</b> People prefer stable coin because there is no fear of loss of any kind unlike other crypto coins. As a crypto trader you will always be advice to invest what you can afford to loss, but in the case of stable coins there is no such statement because the price moves directly with a real world asset.
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- <b>Absence of too much Volitality:</b> As we have earlier explained above the fluctuation in the price of the asset is almost negligible because sometimes it is not even notice.
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2.) Do you think CBDCs would be good in the future? Weigh the pros and cons in your own undertanding and state your position.
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The world today is evolving with globalization. This means that sooner or later everything will be digitalized. Crypto currency is just a few years old and it has reach almost every part of the world. This means the Central Bank Digital Currency (CBDCs) will be an innovation the will make exploit as it is a means of adopting the new technology. Note that the Central Bank Digital Currency (CBDCs) will be issued by the central bank of that country and if that is done, the currency will have a complete backed up of the nation and wi be used by eventually everyone in the country since it has legally become a medium of exchange.
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Pros of CBDCs
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- <b>Elimination Thirdparty:</b> The presence of third party such as bank will be eliminated completely. Since it is a digital currency, everyone will control his or her asset from the wallet.
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- <b>Accepted by all:</b> Holding to the fact that they said asset will be made and controlled by the central bank of a country, it implies that all those who are living in that country must accept the currency as a medium for their exchange.
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Cons of CBDCs
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- <b>Centralized in nature:</b> We have earlier stated here clearly that the asset will be made by the central bank of a country hence the digital asset will be centralized in nature. This means that the central bank will still have some certain control over your asset.
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- <b>Absence of complete Privacy:</b> Die to the centralised nature of the said token, there will be absence of complete privacy as the central banks can still have access to your account with or without your permission.
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- <b>Gadget:</b> This is very important because for this innovation to be complete, every user has to have a good gadget that can be able to help him or her access his wallet.
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From the pros and cons highlighted above, my position concerning the CBDCs is that the innovation is that the cons has in no small way overweighed the pros and the innovation will not be a good one since the major reason for digital currency is to have certain level of privacy. If the central bank will still have control on the asset then to me it is not a good innovation and should not be allowed.
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3.) Explain in your own words how Rebase Tokens work. Give an illustration.
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Rebase token or Elastic supply token is a type of token that achieve it's own stability in a very different way. This means that rebase tokens are other form of stable coins. Note that this token makes use of demand and supply very well which brings about expansion and contraction in the token. The rebase token makes use of a mechanism known as rebase mechanism to adjust the circulating supply in the said asset.
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Just as we have initial said, this rebase token is another form of a stable coin and it works mainly with the amount of demand and supply of the asset. Demand for the asset leads to increase on the price of the asset similarly supply goes in same direction. Rebase does not affect the price of the asset in the owners wallet rather it affect the number of the asset in the wallet of the user.
Note that we may have positive or negative rebase. Which ever that happens does not change the price of your asset. Let's consider the example below to better understand how this rebase works.
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If I have an 50 rebase coins which worth $50, and then I experienced a negative rebase and then the coins in my wallet drops from 50 coins to 48 coins, this will not affect the worth of the asset because the asset worth will still remain $50 even though the number of coins in my wallet has dropped.
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4.) Go to the https://www.ampleforth.org/dashboard/. Check the necessary parameters and calculate the rebase %. What else can you find on the page?
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To calculate Rebase<br>
Rebase % = {[(Oracle Rate - Price Target) / Price Target] * 100}/10<br>
Let's consider the information on the chart below<br>
Given<br>
Oracle Rate = $1.003<br>
Price Target = $1.061<br>
Rebase % = {[(Oracle Rate - Price Target) / Price Target] * 100}/10<br>
Rebase % = {[(1.003 - 1.061) / 1.061] * 100}/10<br>
= [(-0.058/1.061) * 100]/10<br>
= (-0.055 * 100)/10<br>
= -5.467/10<br>
Rebase % = -0.547%
**What else can you find on the page?**
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More information on the chart include the next rebase time, circulating/total supply. In the price chart, you will notice 3 parallel lines with the names price target, expansion threshold and contraction threshold. See the screenshot above.
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The other information contained in the chart are the market cap and the AMPL CAM. They all contains various information as seen in the screenshot above.
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5.) Trade some tokens for at least $15 worth of USDT on Binance and explain your steps. (Give necessary Screenshots of the transaction).
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Here I will be using my Binance account to perform this transaction. I logged into my Binance mobile app. I selected trade option and then selected a pair of BAND and USDT, I sold 1.8 BAND token to get 15.2622 USDT. See screenshot below.
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Here I used a market order and I acted as a market taker. The transaction executed immediately. See screenshot of the order below.
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After the order I was able to check the amount of USDT I have and it's equivalent in price of NGN. See the screenshot below.
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6.) Transfer the USDT to another wallet with the Tron Network. From the transaction, what are the pros of the stablecoin over fiat money transactions? (Give Screenshot of the transaction).
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As a Nigerian, the two exchange platform I trade with is the Binance exchange platform and the Roqqu wallet. So for this question I will be transferring the asset from Binance to Roqqu.
Step 1 get your Roqqu USDT wallet address copy it. See screenshot of image below
Step 2, go to you Binance exchange account and them click on wallet. See screenshot below
Step 3, Click on withdraw option as seen in the screenshot below
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Step 4, fill the entire form that will pop up correctly and then click on withdraw. See screenshot below.
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Step 5, you need to click on confirm withdrawal as there wi be a pop up menu requiring to check and verify your data. See screenshot below.
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Step 6, once you have click on confirm, you will have to authenticate the operations. To have access for the transaction to be completed. See screenshots containing the transaction details.
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Concerning the advantages I experienced at the course of my transaction, I noticed that the transaction is very fast and a lot of authentication was put in place in other to avoid loss. Fiat transaction don't have all these security measure and may not be as fast as this transaction.
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# <center>Conclusion</center>
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Stable coins as we have mentioned earlier are those coins which have their prices pegged to real world asset. USDT is a very good example of stable coin. The CBDCs as I have earlier explained will not be good because of lack of complete privacy. The central bank as well as the government may make bad policy which may affect different users of the coin. In all, these lecture is indeed a comprehensive and well educative lecture so thank you so much professor @awesononso.
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