To answer if LUNA is a good investment, we have to first find out what LUNA is and then look at it’s value proposition,
LUNA is the used in the main blockchain token for the Terra Blockchain. Now throughout the article, I will be using LUNA and Terra interchangeably or in the same place but with parenthesis. Since the article is on LUNA, we will assume that it is one and the same. Terra(LUNA) is programmable money/currency for the internet. One of the issues that people realized when Bitcoin was born and other Cryptocurrencies was price stability. It’s hard for merchants to accept a currency that is highly volatile. When a customer makes a payment, merchants want to be guaranteed that they get their full payment. In the case of Bitcoin, if a merchant is unfortunate, the payment they receive might be 10–20% lower because of price volatility. This frankly was the big drawback in the early adoption of Bitcoin and still is though there are solutions now that do instant conversions.
LUNA dealing with the issue of price stability and adoption making LUNA a good investment.
According to Terra (LUNA) White paper, the way Terra Protocol solves this issue is the idea that a cryptocurrency with an elastic monetary policy would maintain a stable price while still retaining all the censorship resistance of of Bitcoin and making it viable for use in everyday transactions. In the core of Terra protocol are a slew of cryptocurrencies pegged to the world’s major currencies. Now since the USD is the most widely used, the Terra USD (UST) has the biggest impact on the protocol.
It’s still sometimes hard for people to understand the correlation of UST to Terra (LUNA). I believe that this lack of understanding is the main reason the price of LUNA has not exploded. I have had several people on my YouTube videos, ask me several times to explain and re-explain this. I believe that this is at the core of the value of LUNA. I don’t think it is hard to explain. The issue is that not a lot of Cryptocurrencies have their main coin/token have some kind of correlation to the a stable coin.
Minting and use of UST makes LUNA a good investment.
So the simple explanation is that minting or burning of LUNA is tied to the minting and burning of UST. They…