Stablecoin with Real Use Cases Matters

Sinhae Lee
May 7 · 3 min read

When the dot-com bubble burst in 1999, many saw that as the end of a slow and expensive technology. It later became clear this was not only a pivotal turning point in tech history, but the beginning of Web 2.0, user-generated social content, and the internet as we know it.

Now, in the midst of the longest bear market in Bitcoin’s history, blockchain technology is witness to similar skepticism. How long before blockchain, like the internet before it, brings to life meaningful use cases with user friendly experiences to enable mainstream adoption? When will we see easy-to-use, decentralized use cases outside of gambling/gaming, and a top dApp with more than just a few thousand DAUs?

Mass adoption won’t occur until retail users frictionlessly interact with digital wallets in their everyday lives, transferring value as easily as we send emails and messages today. The day will come when digital wallets are commonplace for everything from paying merchants and friends to receiving income, managing investments, and more. And stablecoins will play a vital role in making this future a reality. By reducing the friction of traditional financial infrastructure and eliminating the price volatility historically native to cryptocurrencies, stablecoins will function as a bridge between traditional finance and the emergent blockchain future.

Currently, there have been many stablecoin attempts with various methods to stabilize the price. But for one to secure a dominant market position, facilitating real world usage is essential — as the failure of the U.S. Gold Standard showed, the only thing better for a currency than being backed by a stable asset is being backed by actual usage. It provides convenience, security, and economic benefits to users and the community at large.

This is why GBIC is so excited about Terra’s approach — by targeting e-commerce first, Terra will improve the experience for users, making it easier to gain widespread adoption. Terra will be used by 15 separate e-commerce companies including TMON, one of the biggest e-commerce companies in Korea; Carousell, the number one secondaries market in South East Asia; and many more exciting enterprises. Not only that, but by using Terra, consumers will see a 5–10% discount on every purchase.

Of course, even with advantages like this, changing people’s habits is not an easy task especially regarding payment methods. Even Apple Pay failed to reach 5% market penetration years after launching. The key to widespread adoption is properly aligning the incentives of both users and merchants. Will the Terra discount of up to 10% incentivize users to adopt? Will the digital currency advantages of immediate settlement and virtually no to lower transaction fees incentivize merchants to adopt? Not only do we think so, but we strongly believe Terra will be one of the first stablecoins to get these incentives right.

Another factor for a successful stablecoin are partnerships with traditional financial institutions. Terra’s experienced executive team has built strong partnerships with local banks to ensure easy fiat onboarding and offboarding. Moreover, they have been connecting with regulatory bodies in different countries to educate them on the benefits of stablecoin usage. Historically, regulators have been afraid of two things regarding cryptocurrencies: First, retail investors getting scammed in fraudulent investment opportunities (this is not relevant to stablecoins in general as they are inherently designed to exhibit no upside or downside for users). Second, the tracking of capital inflows and outflows from the financial ecosystem for preventing financial crime. The Terra team has made sure that its payment solution will have the proper KYC/AML procedures, and we believe their leadership’s prior experience building companies and working with regulators and financial institutions will go a long way in helping them navigate this journey successfully.

Since our first meeting with Terra, GBIC has been fascinated by the founding team’s passion and expertise in bringing this new technology to the market. We are standing on the brink of a new era of finance, and 2019 will be a milestone year for Terra to showcase a stablecoin with advantages for mainstream users alike. Terra is changing the way we think about and interact with digital assets, and is building the future of money.

We are strong supporters of Terra and its vision, and look forward to working closely to help them achieve this future.

If you want to learn more about Terra, visit their website: https://terra.money/

GBIC

GBIC (Global Blockchain Innovative Capital) is a multi-strategy crypto fund with offices in New York, Shanghai and Seoul

Sinhae Lee

Written by

Partner at GBIC — a blockchain and cryptocurrency fund, and Block72 — a comprehensive blockchain consulting firm based in US, China, and Korea.

GBIC

GBIC

GBIC (Global Blockchain Innovative Capital) is a multi-strategy crypto fund with offices in New York, Shanghai and Seoul

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