When someone goes into cryptocurrency trading, it has always been a challenge to foresee the behaviour of each digital currency in the market. There are times when it can have such a great value which could sometimes seem as valuable as gold. And this is true because some time last year, financial experts observed that bitcoin which is one of the most commonly used crypto was able to be valued at more than $40,000 per coin. Since the value for this crypto proved that it was indeed a volatile asset, some developers created coins that are based on precious metals such as gold while others also created dollar based coins. In this article, we shall aim our discussion about the use of these types of cryptocurrencies in the trade.
Trading with Gold Pegged Crypto
One good reason for traders to use gold pegged cryptocurrency is the fact that this type of digital currency will always possess a minimum value which is equivalent to a fixed amount of gold. Thus this means that crypto currencies of this type are protected against bottom dropping out. Though Gold Pegged Cryptocurrencies offer great advantages, traders should also take note of its drawbacks. Since this type of crypto is manipulated by the manufacturing company, certain scammers would intentionally keep the details of gold storage and its source a secret. So as a trader, it is advised that you initially investigate the company’s source of gold and where they keep it to make sure that you are dealing with a legit manufacturer.
Trading with US Dollar Pegged Cryptocurrency
The trend for traders who are into USD pegged Cryptos keeps increasing because it is an eye catching instrument for investors. This happens because USD pegged crypto developers have reasonable ideas to convert their fiat currency into cryptos because both fiat and USD pegged cryptos have the same value but the latter could be more convenient in terms of usability,storage and accessibility. As a financial jargon, USD pegged currency is also called stablecoin.With its name, we can also learn that the developers goal is to make digital coins be as stable as fiat currencies.
However, if we literally take a look at the other side of the coin, gold pegged cryptos could pose danger to the economy by disrupting the fiat system to the extent that they could remove and replace the system. This indeed is the ultimate goal.
By putting together all the things that we talked about in this article, we can derive that cryptocurrency trading in any form, including the use of gold and dollar pegged coins pose two possibilities. They may play towards your will but they may go against you. Considering everything that we shared including the pros and cons of each type of trading requires additional reading and research in order to be successful in this field. However, the best piece of advice that we can give you, is to try to explore, take risks but have a stable and intelligent contingency measure in case of failure.