Stablecoins[1] have been all the rage this year with currently dozens in circulation bearing names like Tether, Basis, Sagacoin, TrueUSD, Dai and Carbon. Just this month, two more came onto the market, the Paxos Standard token and the Gemini Dollar[2], which both received regulatory approval from the New York Department of Financial Services.
Stablecoins are designed to maintain a consistent value, either because they are backed 1:1 with fiat currency, utilize collateral or employ an algorithm that adjusts supply accordingly based on activity.
The appeal here is obvious: stablecoins have the technological features of cryptocurrencies but unlike traditional cryptocurrencies which trade at wildly fluctuating prices, the value of a stablecoin is stable (hence the name) in terms of dollars or their equivalent, making these attractive as units of account and stores of value.
“Tokenized money has clear advantages over traditional money: forgery is essentially impossible, better traceability improves regulatory functions like AML and makes monetary policy easier to set, and transactions become more efficient through reduced reliance on middlemen,” Daniel Mason, vice president of strategy and operations at Spring Labs[3], a startup developing a blockchain network to securely share beliefs about credit and identity data, told CoinJournal. These represent “a huge opportunity within the cryptocurrency space,” he said.
Like Mason, Kain Warwick, founder of Havven[4], a decentralized autonomous organization overseen a stablecoin called nUSD, agrees that there’s a bright future ahead for the new type of cryptocurrencies, which he believes will be key to the growth of the broader blockchain ecosystem.
“If the blockchain ecosystem is to continue expanding, the friction of only being able to transact with volatile currencies must be resolved,” Warwick noted.
“Payments should be the core of the ecosystem, but as long as transacting with
