Volatility — is fluctuations in prices as to a certain level.
For better understanding, let us give an example why big price fluctuations of an asset (high volatility) is a bad thing:
Imagine that Alice decided to sell her old mobile phone to Bob.
If she sells it for bitcoin or another crypto-currency, then she is at risk.
Let us assume that she wants to sell it for 500 USD in bitcoins this is 0.313194 BTC at the rate of 1 596,45 on May 8, 2014. After selling the phone the next day, she wants to convert coins into dollars, but she finds out that bitcoin is already worth 1 300. As a result, after converting the received BTC, she has lost 92,84 USD, and in the future she will unlikely use such a method. And millions of other people and online shops think the same way: to use crypto-currency as a mean of payment is risky.
That is why it is difficult or to be more precise it is impossible for bitcoin and other crypto-currencies to become a widespread mean of payment. As a result, the main holders of crypto-currencies are speculators and long-term investors.
We’ve considered crypto-currency as a mean of payment for goods sold or purchased, and now let’s move on to existing platforms for creating tokens and smart contracts.
To create 1 token or 1 smart contract, you need to pay 1 Xtoken (an example of a resource you need to pay to perform actions on these platforms).
The problem is that the cost of Xtoken is not fixed, and it fluctuates on the market. Provided that the platform is gaining popularity, the cost of xtoken is growing, and it won’t be profitable for people to create tokens or smart contracts on such platforms. If yesterday the token price was $10 and tomorrow it is $20, less people will decide to pay more for the same actions. Paradox: The popularity of platforms reduces the number of its users.
That’s why for the development of crypto-currency as a mean of payment and a resource for creating smart contracts and tokens, one should control its price fluctuations.
After we identified this problem, we began to search for the solution. After thinking the issue over and consultation with competent people, we came to a decision. The solution turned out to be very simple: it is not necessary to invent anything new, but rather simply to apply the already existing mechanism for regulating the price of national currency by the central bank.
We won’t make a huge post about how volatility will be regulated; you can read find this information in the White paper.
Many people wrote that “there are already solutions for stabilization asset price”.
Our answer is as follows:
Stabilization of prices in the horizontal corridor will not lead to anything good.
If you do not believe, just look at the volume of trading of existing solutions.
Our main distinctive feature is that we stabilize the price in the uplink, i.e. we support the growth through the MinеxBank algorithm.
This is done for several reasons:
●Horizontally stable currencies are not attractive for traders, med-term and long-term investors. The absence of these participants greatly reduces the liquidity of the asset (Liquidity means the ability to sell the asset without losing the value of the asset).
● Due to the rate growth, capitalization of the crypto-currency is increasing.
The growth of capitalization is very important for more participants to use this crypto-currency for payments.
For example: If the capitalization of xCoin is $10 000, then it can not be used for buying a car priced at $15 000. The higher capitalization is, the more goods and services you can sell or buy for it.
As a result, we will receive an asset that will be used by traders, investors and sellers.
If you’ve read the first part of the article, then you remember that originally MinеxBank supposed to have other functions, but after realizing the problem, MinеxBank became an algorithm for stabilizing prices and nothing more.
Now, after a series of publications, we hope readers understand what MinexCoin and MinexEcosystem are, but still let’s summarize.
MinexCoin is a mean of payment on the Internet and a resource for using the functions of MinexEcosystem (MinеxBank, MinexPlatform, MinexExchange, MinexMarket.
The objective of MinexCoin is to become the dominant payment system.
The objective of Minex Ecosystem is to provide users with useful functions and stimulate the demand for MinexCoin.
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