Since the launch of Bitcoin in 2008 there have been so many new cryptocurrencies released. Some of them offer new uses for crypto that allow for faster purchasing or programmable currency. However, a lot of them are simply financial instruments. There has been a big influx of meme coins, which don’t have a huge number of real-world applications beyond investing.
However, there are some developers that are creating cryptocurrencies designed to change the way that the economy works and maximize the impact of the blockchain. If you are looking to invest in crypto, these are the ones that you should be focused on.
Terra Luna is one of those coins and anybody interested in the world of crypto needs to know about it. Here’s why:
What is Terra Luna?
The big problem with real-world applications of cryptocurrencies is that they’re so volatile. People aren’t using Bitcoin to pay for things because it’s likely to increase in value in the next year. It’s not tied to the economy in the same way that a traditional currency is, and the value tends to keep going up, so most people that have them are either holding them or selling them to make a profit.
There is something called a stablecoin that aims to solve this problem. Coins like USDC and USDT work by holding a certain amount of US dollars and then issuing coins that are backed by those dollars. So, a single coin can always be redeemed for $1 and the currency remains stable. Other stablecoins do a similar thing but they are backed by Ethereum cryptocurrency rather than the US dollar.
These stablecoins solve the problem of volatility, but they are no longer a truly decentralized currency, which is one of the big benefits of crypto. Terra Luna aims to be a completely decentralized stablecoin, which people can use day to day.
How Does It Work?
The way that Terra Luna works is that it uses an algorithm to control the supply of coins based on the demand. Terra offers a number of different stablecoins around the world, each tied to real currencies in the same way as USDC or USDT. The difference is these coins are all backed by Terra Luna. So, when the demand for a certain coin goes up and the value would normally fluctuate, Terra Luna coins are transferred into that specific coin to alter the supply and stabilize the value. If the value goes down, the coins can be transferred back into Terra Luna to reduce the supply and boost the value again, making it stable.
Why Should You Care?
So, why is it important? Well, Terra Luna is the first completely stable, decentralized coin. Essentially, it offers the stability of normal currency with all of the benefits of crypto. It also makes it a real possibility that crypto can be used in our day to day lives. This means that the value is likely to increase a lot in the next few years (you can track it at okx.com).
So, anybody that is interested in the future of cryptocurrency or wants to invest in crypto should keep up to date with the development of Terra Luna.
