Source for BlockChain News

Category archive

stablecoin

Back to the Basics | Can Stablecoins Save Crypto’s Soul?

by
stablecoins

stablecoins

When the perpetually mysterious Satoshi Nakamoto, founder of Bitcoin, set out to build his own cryptocurrency, it’s fair to assume that he didn’t foresee where his creation would be just 10 years down the line.

This isn’t to say that the enigmatic developer didn’t have big plans for Bitcoin. After all, the aim of the digital currency was to ultimately overthrow the financial sector of the time. Instead, it became a capitalist dream—hurtling towards market values of almost $20,000 at its peak, before caving in on itself over the twelve months that followed.

Astoundingly, considering the unprecedented connectivity that we enjoy today, Satoshi Nakamoto has never been officially identified following the rise of his creation. Considering that he is rumored to own around 1 million Bitcoins that haven’t been touched—even during the cryptocurrency’s highest peaks—this has led to some investors to claim that Nakamoto died after founding his digital currency.

It would be quite something to hear Nakamoto’s thoughts on the ecosystem that he created. In the early days of Bitcoin, some adopters were keen to get the cryptocurrency up and running as a viable payment alternative—with some hip fast food places accepting the coin and a few businesses offering to pay salaries in Bitcoin.

Cryptocurrency startups established themselves in a bid to support transactions through Bitcoin. BitPay could’ve paved the way for the currency to be used to buy groceries or cinema tickets, but adoption wasn’t widespread enough to bring viability and Bitcoin began to mutate.

Last year, The Next Web found that 44% of all Bitcoin transactions are for illegal activities. Users found that Bitcoin was an ideal and untraceable currency for use on the dark web.

Writing for The Outline, Adrianne Jeffries said, “Nakamoto was a libertarian who wanted to create a system for payments that would circumvent governments, bankers, and corporations.”

He continued, “Instead, Bitcoin is now a get-rich-quick scheme that retains none of the exciting, anarchist features it proposed and has created a secondary economy with financial shenanigans that mirror the ones that led to the global financial crisis.”

It would be hard to classify Bitcoin as a failure, but it’s fair to say that the cryptocurrency has lost the soul it had as an emerging financial alternative off the back of 2008’s devastating financial crash.

There is, however, hope for the soul of the crypto-ecosystem as a whole.

2020 promises to be one of the biggest years for the world of cryptocurrencies. Stablecoins aren’t exactly new, but with the anticipated arrival of Facebook’s Libra and Wells Fargo Digital Cash, the volatility-free industry of stablecoins looks set to take centre stage.

Stability in the Face of Volatility

In December 2017, Bitcoin reached a value of almost $20,000; one year on it had dwindled to nearly $3,000.

As a digital currency that was designed to operate as a reliable alternate payment system, the success of the Bitcoin bull run in 2017 rendered the cryptocurrency unfit for its intended purpose.

>> Ripple Transfers XRP to New Trading Address: Bad News for Crypto?

Stablecoins, however, are pegged to real-world assets like the US Dollar or gold. Because of this, there aren’t any meteoric rises in value, but no crippling drops either.

Ethically speaking, stablecoins will be free from the clutches of speculators and profit-turning investors, leaving the digital coins to operate as they should—as a universal currency that can be used seamlessly beyond borders.

Practical Application

Stablecoins like Wells Fargo Digital CashTimvi (TMV), and Tether have been designed with convenience in mind.

When Wells Fargo announced its own digital stablecoin, the banking giants did so with an eye firmly fixed on enabling easy transactions. Lisa Frazier, head of the Innovation Group at Wells Fargo, boldly predicted that Digital Cash will be “faster than SWIFT, cheaper and definitely more efficient.”

Wells Fargo Digital Cash uses R3’s Corda Enterprise software to leverage swift book transfers internally—enabling funds to move seamlessly from a payer’s account to a payee’s account within the bank.

The true pace of Digital Cash remains to be seen, but if it is indeed faster than SWIFT, then it represents a step in the right direction towards utilizing crypto payments for everyday activities—like buying a coffee on the way to work.

Reaching the Unbanked

When Facebook announced Libra, its stablecoin that’s due to be released in 2020, it was done so from a humanitarian perspective.

Libra has been developed with the aim of reaching out to the unbanked citizens of the world. “For many people around the world, even basic financial services are still out of reach: almost half of the adults in the world don’t have an active bank account, and those numbers are worse in developing countries and even worse for women,” wrote Facebook subsidiary Calibra in a recent company statement.

Facebook, along with 28 other founding members of The Libra Association, including Visa, Mastercard, PayPal, Uber, Lyft, and Coinbase, among others, will focus on developing a stable universal currency that’s designed to accommodate low-cost transactions across borders.

“The goal of this new project is to build a financial ecosystem that can plug in and empower billions of people,” explained Dante Disparte, head of policy and communications for the Libra Association.

It’s early days yet, but 2020 may well be a watershed moment for driving the world of cryptocurrencies away from the soulless Wild West period of late-2017 and 2018 and into a new era of inclusivity and innovation. Hope springs eternal.

This article was curated through CryptoCurrencyNews’ Contributor Program. If you would like to write for us, send us your submission!

Featured image: DepositPhotos © monsit

If You Liked This Article Click To Share

3 Stablecoins Everyone Should Know

by
stablecoin

stablecoin

You may be familiar with the term stablecoin. But because it is a relatively new type of cryptocurrency, you may not be familiar with what it is.

So what is it? Why is there so much fuss surrounding these coins and what are the stablecoins you should know about?

Let’s dig in!

Stablecoins: What On Earth are They?

In its most simple terms, a stablecoin is a cryptocurrency that is pegged to a tangible, or stable, asset. Examples of a stable asset include gold or the US dollar. The idea of backing a cryptocurrency with a tangible asset is to reduce the price volatility associated with standard cryptocurrency. In doing so, digital coins become far more practical for everyday use, and it may encourage global adoption.

Cryptocurrency Volatility

Standard cryptocurrencies such as Bitcoin have high volatility. On any given day, the value can suddenly increase or decrease (often by significant percentages) for no apparent reason other than market hearsay or fear mongering. This is because the value of Bitcoin, and other cryptocurrencies, depends on what value is given to it by investors. It does not depend on a physical asset to determine its worth. Because of this, Bitcoin and most cryptocurrencies are inconvenient for daily transactions.

Imagine this: You are a vendor, and you sell a dress in exchange for 300 RPX. At the time of the transaction, 300 RPX could be worth $35 USD. However, the next day that same amount of RPX could now equal $23 USD. You wouldn’t be a very happy vendor. Further, you would be consistently aware of the ever-changing value to which your wares are a victim too.

Price changes like this are shocking for merchants and consumers alike. But the adoption of stablecoins may be a catalyst to the decentralized cryptocurrency system working mainstream.

>> Are Stablecoins the Future? The Winklevoss Twins Seem to Think So!

Stablecoins Offer an Optimal Currency

The goal is to create an optimal currency.

According to Forbes“an optimal cryptocurrency should have the following four traits: price stability, scalability, privacy, and decentralization.”

Price stability is the key trait, and this is what a stablecoin aims to achieve. As Forbes explains further, “Short-term stability is important for transactions and long-term stability is important for holding.”

So let’s look at some examples of stablecoin projects aiming to create the optimal cryptocurrency.

Tether: The Pioneer

You can’t talk about stablecoins without giving a nod to the pioneer. Tether is notable because it’s widely considered the first stablecoin.

1-to-1 USD

Tether claims it is 100% backed by fiat currency held in a reserve bank account. It is said to be backed 1-for-1 to the US dollar, with 1 Tether being equal to $1 USD. It will remain fully backed once all Tethers in circulation are less than or equal to all the fiat held in the reserve.

stablecoin

Most Established but Controversial

As it is the pioneering stablecoin, Tether is the most established and is well-integrated. However, Tether has faced controversy in the past, as its claims have not been legitimately proven. The company’s terms and conditions state that “Tether reserves the right to refuse to issue or redeem Tether Tokens.”

Some fear this statement gives the company credence to not redeem the currency at the 1-to-1 value it claims.

uBUCK: The All-in-One Convenience

uBUCK is a digital currency wallet that has fiat capabilities.

According to its website, uBUCK enables you to “pay people with uBUCK cash with lightning speed, make purchases online at approved merchants or withdraw cash at the ATM.”

With the ability to buy uBUCK Cash using either Bitcoin or Ethereum cryptocurrencies, a user is effectively “storing” their cryptocurrency in a stablecoin that is tied to the US dollar.

>> Circle and Coinbase Launch Their Joint Stablecoin USDC

How Does It Work?

It works like this: A user buys a prepaid uBUCK voucher from the uBUCK mobile application. As stated, you can use BTC or ETH to buy, but regular fiat credit and debit purchases are also accepted.

stablecoin

Users then load the uBUCK Debit MasterCard (linked to the uBUCK wallet) with their voucher credit, effectively converting the uBUCK Cash into dollars by doing so. This then means ATM withdrawals and regular shopping around the globe is possible with the uBUCK MasterCard.

Wallets

uBUCK comes with four secure wallets. These are the uBUCK Cash Wallet, a Bitcoin wallet, Ethereum wallet, and the USD Debit card. By having a multi-functional wallet, a user can manage their digital and fiat currency in one convenient place. Then, as stated, by using the uBUCK app, the wallet enables users to store, convert, and spend their fiat and cryptocurrencies.

Free Money Transfer

Another interesting feature of this platform is that users can send uBUCK vouchers to other recipients anywhere around the world for free. Essentially, the service allows free money transfers in only a few minutes.

MakerDao: Complex but Transparent

Maker is a decentralized autonomous organization, and its stablecoin is called Dai. Pegged against the US dollar, Dai operates on the Ethereum blockchain and, as such, it is transparent.

Asset Collateral

Each Dai is worth $1 USD, and the website states that “Every Dai is backed in excess by collateral at all times, so you never have to worry about its value moving up or down.

Further:

“Every Dai is backed by another asset of value. Our collateral portfolio is diversified, allowing multiple assets to guarantee the value of each Dai.”

stablecoin

Ethereum Blockchain

The system is said to be quite complex. To receive Dai, you have to first send your ETH tokens to the Maker platform where they will be “locked up.” Then using the Ethereum blockchain, Maker maintains stability by an autonomous system of smart contracts.

According to its website, Dai offers freedom from volatility:

“Dai stands to transform the financial industry by creating a stable and decentralized currency that will allow businesses to realize the future of money.”

>> Facebook Cryptocurrency: Is the Tech Giant Developing a Stablecoin?

The Takeaway

Stablecoins can bring stability to the crypto world and offer real potential for global adoption. The key is to create the optimal cryptocurrency inclusive of price stability, decentralization, scalability, and privacy.

The technology is still relatively young and will continually evolve, but it is clear that demand is there. People are looking for the balance between a decentralized payment network and stable value.

Everybody wants to feel secure in their transactions and know that they won’t lose value on their assets for no reason other than market hype.

We’ve mentioned only a few stablecoins here. There are more out there! Do you have any favorites? Do believe the technology will work and bring us towards that optimal currency?

Let us know below!

Featured image: DepositPhotos © zim90

If You Liked This Article Click To Share

Stablecoin Market is Showing Signs of Solid Growth

by
stablecoin

stablecoin

The cryptocurrency market has possibly been one of the most innovative things to have emerged over the past decade or so, and during the course of that period, it has taken the world by storm.

However, as everyone knows, ecosystems evolve, and that is what has been happening with regards to the cryptocurrency ecosystem as well. Eventually, the establishment of exchanges allowed millions of people to buy and sell cryptocurrencies with a few clicks. It was the brainchild of crypto exchanges to introduce a new digital asset class, which was to be backed by fiat currency and came to be known as a stablecoin.

Stablecoins are Rising

While crypto experts and enthusiasts never really took these coins seriously, it needs to be pointed out that the market for stablecoins is rising. The fact that they are backed by fiat currency makes stablecoins far more stable (hence the name) than other coins. Users can buy a bunch of stablecoins whenever they feel that the market might be getting a bit too volatile. Tether is one of the most popular stablecoins in the crypto space, and over the years, it has grown in popularity as more and more exchanges have started using it as a means to allow seamless trading.

>> Dogecoin Surges 37% on Binance Listing, Major Moves for Altcoins

Tether is backed by the United States Dollar, but there are other stablecoins backed by other fiat currencies. For instance, there is the eToro, which is backed by the British Pound, and there is TrueGBP, which was established by TrustToken. More and more crypto enthusiasts and traders are now getting into these kinds of coins in a big way, as exchanges continue to create such coins in order to bring some stability to the market.

However, as the crypto market continues to grow this year, experts believe that the stablecoin ecosystem will also continue to grow.

What do you think about the prospectus of stablecoins?

Featured image: DepositPhotos © -Taurus-

If You Liked This Article Click To Share

Binance to Introduce Own USD Stablecoin with Paxos

by
Binance

Binance

Binance is the world’s biggest crypto exchange, and it made a massive announcement yesterday. The world of cryptocurrencies has come a long way since the days when there used to be a handful of tokens and investors generally switched from one token to another. However, over the past few years, a wide range of tokens have come into existence, and perhaps the most interesting ones have been the stablecoins.

Key Development

These coins are backed by the United States dollar and are hence far more stable than traditional crypto tokens. Plenty of organizations have come up with their own stablecoins over the past few years, and now, Binance has decided to join them as well.

The name of the stablecoin in question is Binance USD, and it is going to be backed by the United States dollar at a ratio of 1:1. The announcement was made by the company on Thursday, and it is a significant development considering the fact that Binance remains one of the most popular exchanges worldwide. The token will be known as the BUSD, and the company stated that the token is going to be mined on the Ethereum blockchain. That being said, the company did not rule out the possibility of migration to the Binance Chain at some point in the future.

>> Crypto Insurance Market to Get Boost in Coming Years

However, it is important to note that the whole thing is not being built by Binance alone. The crypto exchange has collaborated with Paxos, the stablecoin issuer, for this project. More importantly, Paxos will also serve as the keeper of the fiat reserves that are essential for running any stablecoin project. The Chief Executive Officer of Binance, Changpend Zhao, stated that Paxos is one of the leading service providers in this particular space, and the company is pleased to work with Paxos on this project. Later on, in September, customers will be able to buy the stablecoin directly from Paxos and start trading on Binance.

Featured image: DepositPhotos © Grey82

If You Liked This Article Click To Share

Wells Fargo to Launch USD-Pegged Stablecoin for Internal Settlements

by
Wells Fargo

Wells Fargo

US multinational megabank Wells Fargo & Co. (NYSE:WFC) has revealed plans to launch a US dollar-linked stablecoin that will run on the company’s first blockchain platform.

The “Wells Fargo Digital Cash”

The service, dubbed “Wells Fargo Digital Cash,” is a tokenized dollar that will be used in internal settlement across the firm’s business. The stablecoin will be piloted first and will debut next year. It’s initially targeting USD transfers, but there is a wider plan to accommodate transfers in other currencies within the company’s blockchain network.

On Tuesday, the company said that the stablecoin will enable settlement of internal cross border payments on the Wells Fargo network. Also, international locations will be able to transfer funds between each other through the token.

Lisa Frazier, Wells Fargo’s head of innovation, said that with banking services increasingly becoming digital, the company sees a growing demand for minimizing challenges that come with traditional borders. She added that with technological advancement, Wells Fargo is in a strong position to reduce the friction that traditional borders present.

The Solution Will Enable the Seamless Transfer of Funds

The company has indicated that its proprietary blockchain network will enable it to transfer money in real-time. This will be seamless without impacting the underlying account, reconcilement infrastructure, or the transaction postings. It will also make it possible for international locations to transfer funds outside normal operating hours. This will do away with the need of third party payment intermediaries as well as reduce time and costs associated with the transactions.

>> Binance Makes Investment in Chinese Crypto Media Firm Mars Finance

Wells Fargo has indicated that its blockchain is built on Corda Enterprise, which is a version of R3’s DTL. A spokesman said that R3 Corda Enterprise is a solution that enables banks to scale transaction volumes and throughput and data confidentiality controls. The system that Wells Fargo is piloting is synonymous to JPMorgan’s JPM Coin and its Interbank Information Network.

The pilot will begin next year with transfers starting in US dollars before expanding to include other currencies. The company hopes to scale the solution to all its branches worldwide.

Featured image: DepositPhotos © alexeynovikov

If You Liked This Article Click To Share

Tether Introduces New Yuan-Linked Stablecoin, CNHT

by
Tether

Tether

The cryptocurrency space has had its fair share of controversies throughout the course of its short existence, and one of the biggest ones to date is the one related to stablecoins. There are plenty of stablecoins in circulation these days, but the most controversial one so far is Tether, and it is simply due to the fact that is it is the most popular one within this particular group of digital assets.

Key Analysis

The reason why many in the crypto space are suspicious of Tether and other stablecoins is because most of them are backed 100% by the United States dollar (or another fiat currency). However, it goes without saying that for many traders, Tether has its own uses, and it has become quite popular over the years.

The controversies surrounding Tether are not going to stop it from growing further, and today the stablecoin issuer announced that it has launched another stablecoin, only this one is going to be backed by the Chinese Yuan. The one backed by the US Dollar is known as the USDT, and the newly launched token is going to be called the CNHT. It should be noted that the Tether platform has also produced the EURT, which is backed 100% by the Euro. Due to the launch of this new digital asset, Tether has stated that the world’s main fiat currencies can now be put to proper digital use.

>> Facebook Libra to Be Pegged to Multiple Currencies as Stablecoin

Tether has had a controversial history so far and is subject to lawsuits related to security laws violations. In addition to that, it has also been alleged that Tether has been used by rogue traders to artificially prop up the price of Bitcoin and other cryptocurrencies. It is a problematic allegation since such actions might point to a pump and dump scheme by way of which gullible investors might end up losing a lot of money. It remains to be seen how the latest digital asset is welcomed by the crypto space.

Featured image: DepositPhotos © artefacti

If You Liked This Article Click To Share

Go to Top