So are stablecoins indeed a game changer for the crypto industry? If so, how early are we in the journey of this essential component or is just starting?
Stable coins are the next evolution of not just crypto but the finance industry in general. Utility tokens are great when speaking about a specific persons use within a particular ecosystem, but when talking about the average person’s day to day life, utility tokens are not a necessity. In order to change the way in which an economy interacts, we need to speak the same language and use the same vocabulary. That language is traditional assets such as dollars, euros, pounds, and gold. This evolution is not a want, but a need in order to incorporate blockchain technology into our daily lives.
Do you see a difference in the crypto-backed stablecoins and asset/currency/exchanged backed stablecoins in terms of technology, governance, dependability, and transparency?
There is a huge difference between the two when a non-volatile token is backed by a volatile asset, this creates a question about its value and dependability. Fluctuations are more likely to occur because of the minimal size of the ecosystem supporting specific crypto assets, compared to a huge economy that utilizes the USD for example. When services are paid with stable coins that can lose huge value at a moment’s notice, companies that accept these tokens as a form of payment can be wiped out as they still need to pay salaries in traditional forms.
Given that asset/currency/exchanged traded commodities are inherently centralized, should we focus on crypto-backed stablecoins?
I believe that in order for our ecosystem to grow and mass adoption to take place, regulation is a defining factor that needs to happen. Once the floodgates are open, and the technology is available to everyone in a simple to use form, the ability to remove these governing powers will be easier. In order to get to that point, traditional centralized assets need to be used in a decentralized way.
How can stablecoins work to be more trustworthy and transparent, especially fiat/asset/commodity backed stablecoins?
Blockchain as a fundamental function is very transparent with every transaction recorded into a public ledger. Trustability and transparency for end users will happen through both smart contracts, ensuring minimum requirements met in order for funds to be transferred. As well as third-party auditing, to ensure backing asset value and exchange ratio are guaranteed.
Tether, for example, whose current market cap is about $2 billion USD claims to have mirrored 1 USD in a bank account for every USDT in circulation, although this has never been proven. Many people claim Tether printed USDT and injected it into the market causing the huge market drop we experienced. For this reason, our SDK distributes stable coins as money enters into the custodian account via smart contracts removing the capability of manipulation.
Stablecoins are here to combat volatility, but how can we utilize what we have learned until now to help new currencies; how do we help challenged communities all over the world, achieve stability?
The questions that I believe that we need to ask ourselves as a world citizen, is what assets will continue to exist and hold a universal value for the long term. Blockchain technology is providing security where there was once doubt. Stable coins are a vessel for traditional money to enter the ecosystem through stability which will in return advance the global reach of finance to everyone.