Crypto Dollars: Are stablecoins effectively marking the end of volatility?
This week we got surprised by JP Morgan announcing the launch of JPM coin, a banking-focused cryptographic alternative to SWIFT, Ripple, and other means of payment. The community’s backlash, including Anthony Pompliano (Morgan Creek Digital’s Founder) tweeting that the coin would become “2019’s tool for money laundering” was almost immediate, and brutal: A new common, centralised enemy had emerged –or so it seemed.
The Stablecoin Ecosystem: A Natural Evolution?
JPM issuing a stablecoin is undoubtedly a sign of the stablecoin ecosystem’s development, almost parallel to that of the “regular” crypto market. Like every ecosystem, stablecoin land has something for everyone: The larger-than-life leader that might be full of it (Tether), the one that tries to prove its worth at all cost (TUSD), the misleaders (Bitcoin Air), and now, some might consider, the opportunists (JPM).
Understanding the stablecoin panorama as an ecosystem is important since those without experience in the crypto world might fall into the a-dollar-is-a-dollar-is-a-crypto-dollar trap. However, one could argue that leaving behind the speculative nature that comes along with ‘regular’ crypto assets is fundamentally good for the adoption and development of an electronic money culture.
Undoubtedly, stablecoins provide the benefit of users looking to secure their assets in the currency that has the strongest backing and background –instead of shooting for the best performer in a volatile market.
Stablecoins As Money
Through all of their existence, however, stablecoins have only been seen as a vehicle to facilitate speculation, as opposed to steering away from it. This has lead to a –somewhat toxic — culture of exchanges and central institutions creating stablecoins for the sake of holding onto speculators’ money.
Looking into this trend, it’s easy to see that there’s an important gap to be filled with stablecoins that are used for everyday transactions, and how this could facilitate a crypto culture. Creating electronic money that is transparent and stable would allow companies and people to conduct daily payments that are private, secure and independent. It would also force banks and other central institutions to provide better alternatives to their current offer and services –therefore improving the lives of virtually everyone in the process.
2019s Panorama: An Upcoming Revolution?
Called “the Year of the Stablecoin” by some, 2019 seems called to be a turning point for the stablecoin ecosystem.
JP Morgan is just one of the players that are joining the stablecoin game. Facebook and Twitter, for instance, have established clear positions regarding cryptocurrency, with the former focused on developing a stablecoin used within Whatsapp for remittance payments in India, a multi-billion dollar industry. Failed states such as Venezuela and Iran have also announced the development of stablecoins aimed at surpassing economic sanctions and re-taking asset-backing standards.
2019 also will see the creation and introduction of the innovative DiamCoin, which will be backed by diamonds while remaining stable to the price of the US Dollar. Such a mix of qualities will allow the coin to provide liquidity while performing in a competitive niche and dealing with well-known, valuable assets (diamonds are one of the best-performing assets in the world). Other payment solutions, such as Plasma, will also compete for the stable kingdom this year.
Final Words
No one can say what will happen in the crypto or stablecoin ecosystem, but the fact that a conversation is happening around the adoption and stabilization topics is, if anything, positive for the state of the market. 2018 already proved that volatility can be harmful and, while sometimes producing exciting days, it is never to be desired in a healthy financial ecosystem.
We’ll have to wait what 2019 will bring… and hope that all of the afore-mentioned projects perform well, for the sake of better, more equal financial systems.
