Stable Bitcoin: New Cryptocurrency Stablecoin Token For BTC Volatility?
Stable Bitcoin is a cryptocurrency project that aims to make bitcoin a more usable currency by boosting its stability.
The project was announced online this past week at Predictevo.com in a blog post titled, “Time for ‘Stable Bitcoin’”. That blog post explains how the Stable Bitcoin protocol works. It also highlights evidence showing Stable Bitcoin in action over the past few months – including its surprising stability during times when bitcoin has spiked or plummeted in value.
Stable Bitcoin is not yet a usable token. Instead, it’s an algorithm that has been extensively tested. It works by blending fiat currency with bitcoin. The development team is actively working to package Stable Bitcoin into a token.
Predictevo, or Predictions Evolved, is a trading systems and predictions developer registered in Panama City. The company’s systems include the EARTH MarketCap System, the VENUS Trading System, and the MARS Trading System. All three systems focus on making profit through cryptocurrency trades – including bitcoin trades and altcoin trades.
Obviously, there are plenty of stablecoin projects on the market today. What makes Stable Bitcoin different? How does it work? Let’s find out.
What Problems Does Stable Bitcoin Seek to Solve?
Stable Bitcoin aims to solve a number of problems with the current state of bitcoin. Obviously, there are a number of issues getting in the way of bitcoin’s mass adoption. One of the most pressing issues is stability. Bitcoin isn’t a stable currency. The price of 1 BTC today, relative to other currencies, can be 10x or 0.1x what it is next year.
With that in mind, some of the problems mentioned on the Stable Bitcoin blog post include:
- Bitcoin has a volatility of more than 70% of year
- Many people avoid buying or transacting bitcoin because of fear of a crash: why would you buy an asset when it could be worth nothing in a few months?
- Merchants struggle to price their goods properly and are forced to sell their bitcoin immediately to hedge their bets
- Customers don’t want to spend their bitcoin because they believe it’s deflationary: why would you spend your bitcoin today for $100 if it’s going to be worth $200 tomorrow? This reduces the usability of bitcoin and discourages mass adoption
- Transaction fees and confirmation times continue to be cumbersome on the bitcoin network
Other stablecoin projects have proposed solutions, including USDT and DAI. These coins are certainly stable because they track the USD and other fiat currencies. However, there’s a problem:
“These coins solve most of these problems but they are not providing you with any appreciation,” explains the Stable Bitcoin blog post. “It sucks for bitcoin to go up 10x while your stable coin does nothing.”
In other words, Stable Bitcoin wants to make a coin that gives you the best of both worlds: you get the stability of a stable currency combined with the appreciation of bitcoin over time.
To many people, that sounds impossible. So how does Stable Bitcoin plan to do it?
How Stable Bitcoin Works
Predictevo has created an algorithm that stabilizes the value of bitcoin without directly locking it to any particular asset. It roughly tracks the price of bitcoin while avoiding the surges and downturns.
Here’s how it works:
“Stable bitcoin allocates a percentage of its capital to BTC and another percentage to USD/EUR equivalent – which can be expressed in stable coins such as TrueUSD, USD Tether, DAI, Goldman’s Circle USD etc”
The developers claim this has led to a surprisingly stable currency. Since 2015, Stable Bitcoin has had a maximum drawdown or loss of 7.5% compared to 70% declines. That makes it more stable than the vast majority of cryptocurrencies – and even several fiat currencies. The Turkish Lira, for example, lost 15% (twice the maximum drawdown of Stable Bitcoin) in a single day.
The Stable Bitcoin algorithm changes its proportion of bitcoin and fiat every day according to its algorithm. As a general rule, Stable Bitcoin’s algorithm follows three restrictions:
- No other coins can be used in the mix; it’s either bitcoin or cash
- No leverage is used
- No shorts are used
Another interesting thing about Stable Bitcoin is that while bitcoin lost 70% of its USD value since the December 2017 high, Stable Bitcoin has gained more than 30% in value.
Stable Bitcoin didn’t seem to experience the same price surge in December and January as bitcoin. Instead, the price gradually rose throughout November and December – it didn’t surge to insane heights like we saw with bitcoin. As bitcoin plummeted, the value of Stable Bitcoin continued to grow.
“’Stable Bitcoin’ tames the volatility of bitcoin to just 17% while still delivering an outstanding return of 60% a year.”
At the same time, Stable Bitcoin’s Sharpe ratio more than doubles, and no historical monthly loss is greater than 3%.
What’s Next for Stable Bitcoin?
At the moment, Stable Bitcoin is just an algorithm created by the team at Predictevo. It works similar to the company’s other algorithms – like the EARTH MarketCap System. That algorithm has been extensively tested to ensure it maintains a stable price of bitcoin over various market conditions.
The next step, according to Predictevo, is to package the Stable Bitcoin protocol into a token. The development team is actively working on that goal.
Any developers who want to get involved with the project are encouraged to reach out to Ben of Predictevo ([email protected]) if they believe they can help with any legal, technical, or fundraising aspects of the project.
To learn more about Stable Bitcoin and how it works, visit the official blog post discussing the protocol here.