‘Stablecoins’ might be the answer to the issues plaguing Bitcoin
FILE PHOTO: A Bitcoin logo is seen on a cryptocurrency ATM in Santa Monica, California, U.S., January 4, 2018. REUTERS/Lucy Nicholson/File Photo
Facebook Inc revealed plans on Tuesday to launch a cryptocurrency called Libra, the latest development in its effort to expand beyond social networking and move into e-commerce and global payments. “People talk about doing crop insurance on the blockchain - but they can’t do that with an asset that moves 10%, day by day,” said Peter Smith, CEO of Blockchain, a London-based cryptocurrency exchange and one of the original providers of digital wallets. “It just doesn’t work.”Tether, the highest-profile stablecoin, is the ninth-biggest cryptocurrency by market capitalization, with coins worth around $3.5 billion in existence. That’s a fraction of bitcoin’s $163 billion market cap.
But in contrast to Facebook’s cryptocurrency, these stablecoins are all issued by “crypto-native” firms whose roots are in the nascent sector. They have therefore faced an uphill struggle for wider acceptance in the real economy.It’s hard to gauge exactly how cryptocurrencies are used, given their near-anonymity. But researchers say stablecoins, like bitcoin, are seldom used for payments, even if their lack of volatility should make them more useful.
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