Why MakerDAO’s stability means it could replace the USD
The United States dollar is a currency used across the world. Rather than just being confined to use in America, it’s the national currency of over 10 countries, with almost a dozen also using it unofficially and accepting it in various shops and businesses. This is due to the stability of the dollar. Thanks to it being pegged to the biggest economy on Earth, the dollar is an incredibly stable and strong currency, which makes it a great fit for growing economies that need consistency. However, the US dollar could be shifted from its spot by MakerDAO’s Stablecoin.
What is Stablecoin?
Stablecoin is a cryptocurrency run by a decentralised community, which means that it isn’t swayed by monetary policy goals or political incentives. Like all cryptocurrencies, MakerDAO’s system is based on blockchain technology, but what differentiates it from the volatility and instability of Bitcoin is its system of governance. Whilst other major cryptocurrencies just follow the supply and demand of financial markets, rising and falling based on investments, MakerDAO’s policies are voted on by the community. The community vote for which fees to impose, what policies to follow and ultimately what the direction of the currency is. This puts MakerDAO firmly in the hands of those that use it, ensuring the users benefit rather than shareholders that are only involved to try and increase turnover. Stablecoin is, simply, a cryptocurrency designed to have the stability of traditional currencies, with the usual flexibility of cryptocurrency.
Why does it beat the dollar?
Major decisions on a global currency such as the US dollar tend to come from major unpredictable political movements. Whether it’s an election in the US, economic strife in a country that uses the dollar or a major global crisis, the US dollar can get incredibly hard to predict. On the other hand, MakerDAO’s Stablecoin is run by the community, with all monetary policy controlled by those with a vested interest. This means that the currency will always follow rational decisions made for the benefit of users.
Stablecoin is highly scalable too, and can be used anywhere due to the nature of digital currencies. The manufacturing cost is minimal, and in an increasingly cashless society, cryptocurrencies and digital wealth are likely to come to the fore. In this case, a system which is run for users that anyone is able to access and get involved in will look far more attractive than the dollar. The flexibility and usefulness anywhere in the world make the dollar seem inflexible, and somewhat restrictive in comparison.
So should you invest?
Simply, yes. MakerDAO is a growing system and one which you could have a significant say in the future of. Due to its high level of democratisation combined with the potential for global growth, MakerDAO’s Stablecoin could find itself in a significant position in global markets with no risk of any crashes.