A new form of cryptocurrency promises to defy financial gravity

TO GET AN idea of just how volatile cryptocurrencies are, compare them with the stockmarket. Bitcoin, the biggest one, moves as much against the dollar in a single day as the S&P 500 does in 23. For speculators, this is a feature. For anyone who wants to use these digital monies for payments, savings or lending, it is a bug. In other words, volatility is a big obstacle to cryptocurrencies becoming much more widely used.

Stablecoins are an attempt to overcome this hurdle: they are cryptocurrencies designed to hold a steady price. Their number has multiplied recently. At least 20 are now traded on crypto-exchanges and many more are in development. Despite their growing number, they still account for just 1.5% of the value of cryptocurrencies in circulation. But they are involved in a large share of all trading.

Investors use them to park assets when they do not want to hold volatile cryptocurrencies...

via The Economist: Finance and economics Business Feeds

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