Generally,
the more volatile an asset is, the riskier it is considered to be as an
investment, and the more potential it has to offer either higher returns or
higher losses over shorter periods of time than comparatively less volatile
assets.
As a newer asset class, crypto is widely considered
to be volatile in view of its potential for significant upward and downward
movements over shorter time periods.
Even
for those business owners who believe they can handle the cryptocurrency
volatility by accepting it as a means of settlement/payment method, it is an
uphill task.
For
instance, Bitcoin which remains the most popular cryptocurrency suffers from
high volatility in its price, or exchange rate. Bitcoin's price rose from just
under $5,000 in March 2020 to over $63,000 in April 2021 only to plunge almost
50% over the next two months.
A
business owner who accepts the U. S. dollar equivalent of cryptocurrency as an
instrument of settlement/payment may wake up the next day and discover that the
crypto he accepted has fallen tremendously against dollar. It becomes obvious
to him that he has incurred a humongous losses.
On the
contrast, the crypto he received may rise in value the following day and that
becomes an added profit for him. So, it his highly unpredictable.
Volatility
of crypto can be great for traders, but it turns routine transactions like
purchases into risky speculation for the business owners because they do not
want to end up taking a loss if the price of a cryptocurrency plunges after
they get paid in it.
So, it
is explicit that volatility of crypto is a thing of concern for a business
owner who wants to integrate a crypto payment gateway, especially FloxyPay,
into his business.
One of
the fundamental strategies of managing crypto volatility by a business owner
who has integrated FloxyPay Crypto Payment Gateway in his business is by
accepting only stablecoins.
Stablecoins
are cryptocurrencies whose values are pegged, or tied, to that of another
currency, commodity, or financial instrument, aimed at providing an alternative
to the high volatility of the most popular cryptocurrencies, including Bitcoin
(BTC), which has made crypto investments less suitable for common transactions.
Those
stablecoins are more useful than more-volatile cryptocurrencies as a medium of
exchange in FloxyPay because they aim to address this problem of volatility by
holding the value of the cryptocurrency steady in a variety of ways.
The
increasing adoption of stablecoins has popularize the use of cryptocurrencies
as a medium of exchange for routine financial transactions, especially in
crypto payment gateways, and other applications.
Tether
(USDT) is the most popular and largest stablecoin by market capitalization. It
is pegged to the U.S. dollar at a 1:1 ratio and backed by gold reserves. It is
also consistently in the top five cryptocurrencies by market cap. You can find
Tether on most major crypto exchanges, including FloxyPay, Kraken, Binance, and
Coinbase.
Since
Tether (USDT) launched in 2014 as the first stablecoin, the list has grown to
include Dai (DAI), USD Coin (USDC), True USD (USDT), Digix Gold, Havven's
Nomin, Paxos Standard, and Binance USD (BUSD).
Obviously,
the apprehension over incorporation of crypto payment gateways into businesses
by business owners have been totally precluded by the increase in the
popularity of using only stablecoins as settlement/payment instruments.
The
onus is now on business owners to state it unequivocally on their websites that
they accept only stablecoins on the integrated FloxyPay Crypro Payment Gateway.
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