What is DAI and what is Maker (MKR)?

DAI is what is called a Stable-coin.
A stable-coin distinguishes itself from “regular” coins (like bitcoin) by its stable market value.
When investing (or buying) a stable-coin its value remains the same over a long period of time. This is unlike other Cryptocurrencies, whose value is more volatile with many ups and downs over short and long terms of time.

DAI is a stablecoins whose set up and aim is to be as equal in value to 1 dollar.
This means, when trading or investing, you get 1 DAI for 1 dollar.

The set up of this stable-coin is to make Cryptocurrencies more attractive for widespread use. Many Cryptocurrencies are not regarded as safe alternatives for “classic” money due to the aforementioned volatility of their value. This is a hurdle removed with stable-coins.

But what about Maker (MKR)?

MKR is a Cryptocurrency used on the Maker-platform which runs along the DAI stablecoin.

When creating a stable-coin there must be a backing of the coin through assets.
This can be classic money, precious metals, bonds, shares….
With DAI this is backed through Smart Contracts. Maker (MKR) is related to DAI through these smart contracts. It permits voting power on their shared platform when it concerns important decisions (like risk management, paying of loans in DAI,…).
Typically, when a loan is taken in DAI, Maker (MKR) is being used for the 1% interest rate.

For more information check-out here: Maker (MKR)

Opinion and analysis.

I love the idea of stable-coins DAI and its platform as they , in my opinion, are the well-needed intermediary for transitioning from classic money to Cryptocurrencies.

I am not the biggest fan of this asset due to its backing of smart contracts and trying to be equal in value to one dollar. The dollar itself, while serving as a collateral for other classic “fiats” in the world, is in reality valueless due to Nixon taking the dollar OFF the gold standard and creating a worldwide shock (called the Nixon shock).

It it were backed by precious metals, or other assets which are not “free floating” in value, this coin might have hold more of my esteem.

Does this mean I advise AGAINST this coin?
NOT AT ALL.
As a matter of fact this coin is something to have in your digital wallet.
It permits direct exchange towards other interesting Cryptocurrencies to invest in due to its stable nature.
As mentioned before, it is a good coin to transition (and start with) when willing to invest in Cryptocurrencies.

To learn more about DAI check out its whitepaper here.
The DAI and MKR-community can be found on their respective platform here.

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Find more about it here: The Ultimate Guide to Cryptocurrency.