Mass adoption is something that the crypto industry is looking to achieve. A practical use for cryptocurrencies will not only make it a practical asset for speculators but also for everyday transactions. However, one reality that people have to deal with is the volatility of cryptocurrencies.
In 2017, Bitcoin was able to hit its all-time high at near $20,000. By 2018, it has slipped below $6,000. The same goes for other cryptocurrencies.
There were many attempts towards mass adoption. Ripple, for instance, formed partnerships together with banks and even with Western Union in order to smoothen out cross-border transactions.
But still, it is quite hard for businesses to start accepting cryptocurrencies that can fluctuate by 50% at any given time. Price swings can be wild in the world of cryptocurrencies. Just to give you an idea, Bitcoin was able to reach $8,500 when the market was anticipating a possible Bitcoin ETF. However, it slipped all the way back to below $6,000 momentarily.
Many are working towards a more stable version of current cryptocurrencies. These are known as stable coins. Basically, these are digital currencies that are pegged to fiat currencies. The aim mainly is not only to decrease volatility but to also increase overall confidence.
Circle is already launching a coin that works using this concept. It is going to be a token called the USD coin. According to chief executive Jeremy Allaire, “Imagine a US dollar coin that you can make payments with, use on crypto networks, or use in smart contracts to pay dividends, but which you can convert back to fiat currency at any time”. The USD Coin is going to be running on the Ethereum blockchain.
Allaire also mentioned that “Crypto represents the next layer of infrastructure for the internet”. He also added that “It will allow money to move at the speed of light around the world for free, but also offer binding verifiable contracts, enabling anyone to do business together”.
The goal of Circle is for banks to use the USD Coin. Allaire mentioned that “We’re going to see a lot of businesses using tokens for revenue raising. And eventually, central banks will want to do this”.
This project looks promising considering that Circle is backed by Goldman Sachs and Baidu. In fact, it has a value that is close to $3 billion. And also, it has attracted Bitmain to invest another $110 million.
Other Stable Coin Projects
There are also other stable coin projects. For instance, there is Stably, a company based in Vancouver that is developing StableUSD, another US dollar backed stable coin. According to its founder Kory Hoang, the sector represents a “huge opportunity” for those who are living in countries with unstable currencies.
Hoang mentioned that “Fruit sellers on the streets in Zimbabwe could accept your digital payment via an app”. He also mentioned that “Their fiat money is almost worthless, but they could receive tokens in seconds and sell them very easily for a small commission”.
This can be a potentially good solution especially for countries such as Venezuela that has been dealing with hyperinflation.