4. Alternatives to Traditional Virtual Currencies: Stablecoins and Central Banks Digital Currencies

Among the risks of virtual currencies is that they are literally based on nothing other than what the perceiving individual believes a particular currency is worth. If it can be used to purchase goods, realty, services, or other assets, then its value is enhanced. Volatility is the main drawback for the rise and fall of a particular virtual currency. Without a government-backstop the holder is, in essence, left to speculate broadly in the hope of financial gain. In this chapter, we examine other alternatives that may offer the assurance of safety that is totally lacking in almost all such currencies. The discussion will focus on stablecoins which is descriptive of monetary or other assets backing found in alternative cryptocurrencies’ offerings.