Ethereum Solidity Contracts w/ Fiat Money

Question

Is there anyway to fix a price for a ERC20 token? It seems like a major problem with blockchain and crypto is all of the volatility, which is why I am hesitant to use it for applications even though smart contracts are the perfect solution to the problem.

This may seem like a dumb question but just curious, just getting into blockchain and super interesting in all of the crypto stuff going on. Background as a web developer but think blockchain will start to play a big role in that realm and don't want to be left behind.

Thanks for your help in advance!

Answer 1

Sounds like you just invented Stablecoins!

From the Wiki:

Stablecoins are cryptocurrencies designed to minimize the volatility of the price of the stablecoin, relative to some "stable" asset or basket of assets. A stablecoin can be pegged to a cryptocurrency, fiat money, or to exchange-traded commodities (such as precious metals or industrial metals). Stablecoins redeemable in currency, commodities, or fiat money are said to be backed, whereas those tied to an algorithm are referred to as seigniorage-style (not backed).1

Answer 2

You can not put a fixed price tag on a freely tradet Token, but you could read into 'Fiat backet tokens'.

The companies behind those tokens 'promise', to have a reserve of fiat currency for every coin they mint. Kind of like the gold standard, but with tokens and Fiat money.

Answer 3

From a trading point of view, you can fix the price if you are available to both buy and sell any quantity of the token at the price you decide.

If you are not able to both ‘buy’ and ‘sell’ and ‘any quantity’, the price is subjected to the market and, then, it cannot be fixed.

The high volatility in the token market is due to the lack of true demand of them for some real world purpose, but trading.

Any token which could permit to access a real world service (i.e. something existing in the real life for all people, like transportation, goods, information, etc etc) has the volatility due to the dynamics of real world price variation, which is is quite low; on the contrary if both buy and sell are made in order to have gains, but the token itself do not have any use, the volatility is high.