“The traditional world is starting to get a real glimpse at what blockchain and cryptocurrency can do for them,” said Steven Becker, president and COO of MakerDAO.

As interest grows, stablecoins — a form of cryptocurrency — are revolutionizing digital cash and may be the path toward new and improved payment systems.

The value of cryptocurrency has been known to fluctuate drastically on even a daily basis, resulting in crypto investors struggling to find solid footing.

This is where stablecoins come in. Here’s what you need to know.

What Is Stablecoin?

At its core, the stablecoin is a type of cryptocurrency that minimizes the volatility of cryptocurrency by pegging itself to a stable store value, such as gold or the U.S. dollar. In the case of MakerDAO’s Dai and the handful of other stablecoins, the price will never drop below $1.00 USD per coin.

Because stablecoins are a viable form of digital cash that can be exchanged with traditional currency, it makes everyday transactions accessible through cryptocurrency without the risks of value variance with market volatility.

“It’s transactional value volatility and also just general store value volatility that you’re solving for,” Becker said.

Stablecoins offer the ability to complete transactions, without which an economy would not function. Businesses, otherwise skeptical of cryptocurrency that is volatile in nature, are able to launch new use cases with a simple, secure and stabilized form of digital cash.

Who Could Use Stablecoins?

A stablecoin, such as MakerDAO’s Dai, is accessible anywhere around the world, not subject to trade embargo or other economic constraints that could be typically tied to traditional currencies. Without these constraints, businesses are able to expand their services and global reach.

“[Stablecoins are for] folks who want to create a more open economy for themselves to bring more consumers on board,” Becker said.

Blockchain applications that have high potential for business that are now safer and less risky thanks to stablecoins include the following:

• Global transfers and lending
• Merchant services
• Remittances

Social networks have already allowed users make payments with stablecoins across the world, and even banks are planning to integrate stablecoins into international transaction processes.

About MakerDAO’s Dai

MakerDAO’s Dai is the first decentralized stablecoin backed by Ether, the cryptocurrency generated by the Ethereum blockchain-based platform.

“The simplest explanation is that MakerDAO creates a stablecoin that is at the heart of really transacting this DeFi (decentralized finance) economy,” Becker explained. “We're trying to create the facilitation of transactions on chain.”

Pegged 1:1 to the U.S. dollar and backed by excess collateral in smart contracts, Dai stablecoin aims to be more secure, transparent and resilient than other cryptocurrencies.

Unique to MakerDAO, the Dai allows individuals to create bespoke financial solutions on a custom level. Dai holders can also use the Maker mechanism Dai Savings Rate to earn steady, low-risk return on their holdings.

“The construct of the MakerDAO protocol gives you so much versatility that you can see how it is a possible augmentation to your payment rails behind a debit card transaction,” Becker said.

Becker and the MakerDAO team will be exhibiting at CES 2020, showcasing how Dai can integrate with different businesses and helping CES guests attendees the value of a stablecoin.

Learn more about MakerDAO and Dai on The State of the Cryptocurrency Industry episode of CES Tech Talk.