By : Stablecoins on the surface might seem boring. After all, most don’t come with the volatility that’s inherent with most , especially , and therefore have an entirely different risk/return profile. Stablecoin has been an exception to this rule after it lost parity with the U.S. dollar last year amid questions about its reserves.
Make no mistake, however, , most of which are pegged 1:1 to fiat currencies such as the U.S. dollar, are a vital part of the crypto ecosystem, one that will help to unlock the institutional capital that has been trapped on the sidelines and bring crypto closer to wide-scale .
If anybody knows this, it’s crypto exchange CEOs such as ShapeShift’s . ShapeShift doesn’t have its own stablecoin, nor does it plan to create one. But they don’t have to, considering there are plenty of good current projects,” according to Voorhees, who stated:
“Stablecoins are important in the same way that a bridge is important. You may not care much about the bridge, but without it, the beautiful land beyond is much harder to get to.”
100% agree, we need to create bridges between the old work of finance to the new world of digital finance
— Yoni Assia (@yoniassia)
The “beautiful land”, of course, is crypto, and the migrants are investors and consumers. Voorhees previously stated:
“A stable crypto coin is super useful… Both for the rich finance person who needs stable collateral against smart-contracts, and the poor Venezuelan trying to take shelter from currency debasement. Not a replacement for or true cryptos, but a helpful augment to them.”
Navigating Choppy Waters
One Twitter follower asked Voorhees if this includes controversial Tether, saying “it’s like a boat on choppy water.” Voorhees responded:
“Better than no boat in choppy water.”
What the leaders of the crypto space continue to point out is the importance of connecting traditional global finance with crypto. There’s that has yet to make its way into crypto, the latter of which has a combined market cap is $179 billion. If stablecoins are the bridge to do it, bring it on. Venture capitalists like them too, and have into stablecoin projects.
People will poo poo this, but it’s a big deal and an important step. Global finance is becoming further integrated with crypto finance. All that crypto needs in order to win is for this to continue.
— Erik Voorhees (@ErikVoorhees)
Year of the Stablecoin
For a while, Tether was the defacto stablecoins in the market. Last year, a flood of new stablecoins came on the scene, including the regulated Gemini Dollar (GUSD) by the Winklevoss twins and Paxos Standard (PAX), both of which are backed by the U.S. dollar. Gemini explained its stablecoin:
“Essentially, the Gemini dollar allows you to send and receive USD through the .”
Not one to be outdone, Founder Justin Sun also caught stablecoin fever. He for a “USD-pegged stablecoin USDT on the .”
50 million has been issued on ! 100 million is coming!
— Justin Sun (@justinsuntron)
Stablecoins may be “crypto light” given their tie to fiat but they’re still . Users gain access to the agility of the without having to worry about risk associated with erratic price movements or rely on banks. This is attractive to users inside and outside of the crypto ecosystem.
Published at Fri, 19 Apr 2019 19:00:42 +0000
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