Cryptocurrencies have been trendy in the last year or so. However, one of the things that turn off businesses from adopting cryptos is its volatility. Bitcoin, for instance, has jumped from $1,000 to around $20,000 in mid-December last year. Though things are less volatile these days for Bitcoin compared to tech stocks, there is a growing popularity in the utility of stablecoins.
Asher Tan, who is the founder of Melbourne-based Bitcoin exchange CoinJar, since arriving in London eight months ago, Tan has been looking at the next big thing in the volatile world of cryptos. He thinks that the next big thing in the world of crypto is stablecoin. He has left his co-founder Ryan Zhou in charge of the daily operations of the exchange. What exactly has he been doing in London? He’s been meeting fintech companies, bankers, and venture capitalists.
He said that “The interesting thing right now, what’s on everyone’s lips, is what you call stablecoin. A stablecoin is a coin pegged to a currency, usually the US dollar. It’s a craze right now”. He added that “It helps you transfer money around the crypto ecosystem at a stable rate. But there’s a whole lot of applications or use-cases that could come out of it”.
Money Gravitates Towards Stablecoin?
The idea behind stablecoin is not something new according to Tan. He thinks that the money and expertise, however, are just starting to pour in. He believes that there are big-name venture capitalists and geeks that are now seduced by this concept.
The simplest approach is to store a particular currency. This has been done by Tether. However, it faced a number of controversies with claims that it doesn’t have enough number of US dollar reserve and it has been used in order to manipulate the price of Bitcoin.
According to Tan, “How do you keep a peg? These are things that usually only a central bank would have thought about five years ago, and now, you’ve got tech start-ups looking at economics, and how you can peg a currency to a token. It’s fascinating”. And as for those who are going after stablecoins, he observed that “in London I see a lot of finance people getting into it. People with 10,20 years of forex experience are trying their hand at it. It’s drawing a lot of people from traditional financial circles, just because it’s interesting, it’s intriguing, there’s a lot of upside to it”.
Medium of Exchange
Bitcoin has been seen by many as a speculative investment and a store of value at the same time. However, with a stablecoin, it seems that it is going to be able to bring back the appeal of cryptocurrency as a medium of exchange, which is something that can be used as a transaction.
Tan has been looking closely at the possibility of using stablecoins at CoinJar. He said that “We’re looking at it, I think all exchanges are looking to digitize dollars at some point”. Is a Stablecoin really the next big thing at this point? Is this the answer towards having cryptos adopted by businesses?