Cryptocurrencies are highly volatile. This can be seen in the present year as well. Bitcoin was trading around $ 19,000 at the start of this year. Currently, it is trading at around $ 7400. This clearly indicates how volatile cryptocurrencies can be.
The volatility in cryptocurrencies is also one of the main reasons why they are not being used as mediums of the transaction. The problem is that when they are so volatile, the margins can be easily killed by a swing till the time, the transaction is confirmed. This is the reason why many of the merchants are not using the cryptocurrencies.
IBM trying out cryptocurrency:
This, however, has not discouraged IBM from trying out cryptocurrency. It is trying a cryptocurrency which is known by the name of Stablecoin. This is basically a cryptocurrency which is backed by the US dollar. The value of the cryptocurrency is always dependent on the US dollar. According to the company, the volatility of this cryptocurrency is much lower as compared to any other.
Up until now, IBM has also relied on Stellar lumens. However, it has not made any important announcements about Stellar lumens for a long long period of time. That is why it is assumed that IBM is not able to actually use it in real-world applications.
With the news coming out that it is now using this particular cryptocurrency, it seems like it is on its own to try out new cryptocurrencies. If indeed, it is able to create a cryptocurrency which is more stable as compared to others, more and more merchants will start using these cryptocurrencies as well. Since it is backed by the dollar, it will become easier for them to transact on a consistent basis. This will automatically ensure that it gains higher traction as compared to any other cryptocurrency. Also, since it is backed by IBM, there will be more credibility as well.
With that being said, if less volatile cryptocurrencies are made possible, there will be a lot of merchants as well as companies who would be willing to use these cryptocurrencies as well. That is why there is a lot of potential in a cryptocurrency which is not that volatile. Moreover, if the verification of the transactions can be done in a shorter period of time and quickly, the cryptocurrency will gain more and more prominence as well. That is why this might be a changing point in cryptocurrencies if indeed, IBM is able to launch such a cryptocurrency which is more stable and easy to transact with.
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