In recent years, the popularity of stablecoins have been rapidly growing at an exponential rate. A cryptocurrency without the high volatility has greatly appealed to the public, and more emerging stablecoins are making their presence known in the crypto market. So, what is the state of stablecoins today, and where could these coins be heading towards?
Stablecoins have also presented themselves as attractive means of payment due to low cost, global reach and speed. Nevertheless, there are also risks surrounding regulations, consumer protection and financial stability.
Those who have been keeping tabs on crypto news would probably have heard of Tether, the high-profile stablecoin with a current market capitalization of about $4 billion. It was found that in contrary to its initial promises, which read: “Every tether is always backed 1-to-1, by traditional currency held in our reserves. So, 1 USDT is always equivalent to 1 USD.”, Tether later amended their token description to read: “every tether is always 100% backed by our reserves, which include traditional currency and… from time to time, may include other assets and receivables from loans made by Tether to third- parties”, prompting some users to wonder if USDT was backed by tangible assets at all.
Other stablecoins include Dai, USD Coin, Paxos Standard and the Gemini Dollar.
As the cryptocurrency market mature, traders’ expectations have also evolved. Traders are increasingly more concerned about acquiring more advanced products that ensure stability and safe stores of value in times of market volatility. Furthermore, regulators of different countries have either taken a friendlier stance, outright bans or even trying to launch their own digital currencies.
Additionally, Facebook is developing Libra. So are Walmart and Wells Fargo with their own stablecoins. Such competition entering the market challenges status quo through strong innovation and partnerships, allowing users to potentially benefit. However, PayPal, eBay, Visa, Mastercard and Stripe have withdrawn from the coalition.
As new technologies emerge, there is a lot in store for the cryptocurrency market to develop and grow. Those who are involved in the trading of such assets might face many changes in the future, as products are created, amended and improved.
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Disclaimer: This article is not trading or investment advice. It is for entertainment and educational purposes only. Please do your own research before investing into any digital currency.