Bitcoin World Adoption Accelerating
What is a stablecoin?
“any cryptocurrency designed to have a relatively stable price, typically through being pegged to a commodity or currency or having its supply regulated by an algorithm.”
Some stablecoins are pegged to the price of Gold and the dollar in the markets. But the difficulty with the stablecoin is that the algorithm can be tampered with just like in the markets today, resulting in a broken stablecoin.
“Algorithmic stablecoins are inherently fragile.”
Built to Fail: The Inherent Fragility of Algorithmic Stablecoins by Ryan Clements
There is news of Terra, a crypto blockchain protocol announcing to purchase 10 Billion dollars worth of Bitcoin to have their stablecoin, Bitcoin-backed instead of pegged to the US dollar. They are the fourth largest stablecoin in the market, followed by Tether, USDC, and BinanceUSD. The TerraUSD (UST) is roughly $15 Billion in market cap.
The organization is making a significant bet on having its UST backed by Bitcoin. It is bringing “sound money” back on the UST like the times before 1971 when Gold-backed the US dollar. They announced that they approximately $3 Billion in Tether and Luna, looking to convert all of its reserves into Bitcoin.
Terra is becoming a persistent buyer of the remaining Bitcoin with the reserves of $3 Billion working their way to $10 Billion.
“Terra is highlighting the opportunity for Bitcoin-backed assets. Terra’s Do Kwon has discussed at length his belief that Bitcoin is new collateral. It is the hardest, most decentralized asset in the world.”
“Luna Foundation Guard (LFG) has bought over 11,700 BTC worth roughly $520 million so far this week to build a bitcoin reserve to support its stablecoin, TerraUSD (UST).”
Do Kwon made the announcement last week about the purchasing of Bitcoin. The Price rose from $41K to $45K.
Today, the announcement came out of Terra completing $1 Billion of its purchase. With the remaining $2 Billion to go, maybe moving the market to New All-Time Highs reached last year at $70K per Bitcoin.
It is essential to notice and understand the flow of money regarding investing. Terra is making a massive bet on Bitcoin stabilizing its stablecoin. The purchase of Bitcoin from Terra(UST) will be greater than that of bitcoin from Microstrategy and Tesla combined. Game Theory is increasing where Bitcoin is becoming the global reserve currency with the most pristine and hardest collateral. Especially in 7 days when 19 Million bitcoin had been mined. Leaving only 2 million bitcoin left.