Australian bitcoin company CoinJar has introduced Hedged Accounts in an attempt to limit clients’ fears of fluctuations in the value of bictoin. The hedged accounts allow the user to “peg” the price of bitcoin at the time of purchase against multiple currency options including the Australian dollar, British pound, euro, and U.S. dollar. While the accounts won’t improve fluctuations to the actual currency, it will allow users to maintain the original price at which they bought the bitcoin.
As explained in an article published by ZDNet, those who buy a bitcoin at AU$223.24 value will
retain precisely AU$223.24 worth of bitcoin in their hedged account, no matter how bitcoin value may fluctuate. If bitcoin value soars to AU$446.48, the account holder would own 0.5 bitcoin, worth $223.24, whereas if the bitcoin value drops to $111.62, the bitcoin owner would possess 2 bitcoin.”
While the hedged account will allow investors to protect their money from drops in value, the same is true for if the value of bitcoin suddenly increased. That $223.24 investment would remain at $223.24 even if the value of bitcoin doubled. The strength of hedged accounts, however, is they allow small businesses and individuals to hold their savings and use them for everday transactions without the surprise of a sudden loss.
Asher Tan, CEO of CoinJar says,
While some users enjoy the speculative aspects of bitcoin, there are others who would like to hold bitcoin without worrying too much about volatility. Hedged Accounts make bitcoin a more stable currency, and more useful to people.”
Read more here- “CoinJar Pegs Bitcoin to Standard Currencies,” (Leon Spencer, ZDNet)
Olivia is a graduate of Villanova University where she studied Economics and History, minoring in Gender and Women's Studies. She also has experience working with federal legislatures on health care policy, women's issues, and Internet safety.