After the fall of the Bitcoin movement, how will the stablecoin movement with Libra and Gram play out?
Satoshi Nakamoto’s dream of a global digital currency was intended to avoid the pernicious influence of fallible finance institutions that led to the global financial crisis in 2008.
Unfortunately Nakamoto-San’s Bitcoin and blockchain and its cousins in the cryptocurrency space have not quite succeeded, mostly because of the wild gyrations in value.
But in the somewhat longer perspective, it is impossible to believe that the financial institutions will be able to prevent the global digitization of currencies. Especially given the success of Satoshi Nakamoto’s second innovation, Blockchain.
Exactly how this digitization will look is too early to foretell, except that next generation’s cryptocoins will not be wildly fluctuating permissioned bitcoin- like cryptocurrencies but stable permissionless Stablecoins, akin to Facbook’s Libra and Telegram’s Gram. And if you want to see a working second-generation stablecoin system in action, just take a look at IBM’s World Wire based on the Stellar protocol.
The Libra business model is described by Wikipedia: The plan is for the Libra token to be backed by financial assets such as a basket of currencies,[14] and US Treasury securities in an attempt to avoid volatility.[15] Facebook has announced that each of the partners will inject an initial US$10 million, so Libra has full asset backing on the day it opens.[16]
Libra service partners, within the Libra Association, will create new Libra currency units based on demand.[16] Libra currency units will be retired as they are redeemed for conventional currency. https://en.wikipedia.org/wiki/Libra_(cryptocurrency)
And it is important to point out that Libra has not yet been regulated https://corpgov.law.harvard.edu/2019/07/10/regulating-libra/
The Stablecoin market is quite different from the Bitcoin market; much more like tokens than currencies, which may be a reason for why Hyperledger Fabric in an upcoming release is embracing tokens:
Hyperledger FabToken:
https://hyperledger-fabric.readthedocs.io/en/latest/token/FabToken.html Representing assets as tokens allows you to use the blockchain ledger to establish the unique state and ownership of an item, and transfer ownership using a consensus mechanism that is trusted by multiple parties. As long as the ledger is secure, the asset is immutable and cannot be transferred without the owners consent.
Tokens can represent tangible assets, such as goods moving through a supply chain or a financial instrument being traded. Tokens can also represent intangible assets such as loyalty points. Because tokens cannot be transferred without the consent of the owner, and transactions are validated on a distributed ledger, representing assets as tokens allows you to reduce the risk and difficulty of transferring assets across multiple parties.
Hiding in section 5.1 is a most important paragraph in the recent Hyperledger Fabric paper. This describes FABCOIN now renamed to FABTOKEN which is a UTXO (Unspent Transaction Output) Token for Fabric. And UTXO, since it hasn’t been spent, is an abstraction of electronic money, and the most famous example of an UTXO is Bitcoin.
So Hyperledger Fabric is gingerly getting closer to cryptocurrencies.
Will Stablecoins ever take the place of traditional currencies? The future will tell, but it seems clear that we will see progressively more business models around Stablecoins, as society embraces digital technologies, including currencies. It would seem totally counteractive for currencies to never to be digitized, ever.
