0

Is it possible that a cryptocurrency can be stable, without being backed by another currency, for example stable by algorithm?

For example, when the value is too high, the algorithm will increased the number of new tokens created, or when the value is too low, the algorithm will decrease the number of new tokens created.

I would appreciate your help. Thanks.

  • 1
    This is a vague question and makes a lot of assumptions, can you provide more details? Price is determined by exchanges on the market, which consists of people, are you suggesting the people are controlled by an algorithm? – JBaczuk Jan 14 at 15:25
1

It's entirely possible, but no one would invest in such a coin because the return on investment would be predictable and low, and the value itself would be subject to manipulation by the creator. You are basically describing how a Federal Reserve works, and a cryptocurrency that acted like a Fed is useless.

Also, nothing in the blockchain indicates price, so you'd have to source price from an exchange. Each exchange price varies, so it's arbitrary and gameable which exchange is picked.

| improve this answer | |
  • Actually, in my opinion, cryptocurrencies aren't just for investments. The future of cryptocurrencies as being a currency depends on stability, which is why I asked this question. – Andrew Jan 15 at 3:11
  • Thanks though.... – Andrew Jan 15 at 3:12
  • 1
    Adoption happens through investment though. And even so, such a cryptocurrency, if already dominant would slowly lose trust as politicians and Economists manipulated the supply algo. A fairly supplied crypto (BTC) would emerge and supplant it. But regardless, such a currency wont win adoption due to lack of investment – Pillagr Jan 15 at 4:10

Not the answer you're looking for? Browse other questions tagged or ask your own question.