submitted by dForceProtocol to u/dForceProtocol [link] [comments]
When merchants started introducing bitcoin and similar digital currencies as one of their payment methods, they quickly encountered a significant problem: price volatility.
There were instances like a luxury item dealership, which used to accept bitcoins for their products but saw the value their Ferrari cars jump by almost 33% during a test run. The company, dubbed as The White Company, later joined the popular trend of launching a “stablecoin,” a hybrid of blockchain and fiat money, which promised to protect its balance sheets from subtle influences.
WHAT IS STABLECOIN?Rather than fluctuating on the whims of traders’ speculation, a stablecoin is a new blockchain-enabled breed that is characteristically pegged to stable real-world assets, from commodities to currencies. For instance, users can purchase one stablecoin for a dollar, and can also redeem it later for the same price, thus eliminating the notorious crypto price swings.
The stablecoin industry became popular in the wake of 2018’s crypto crash. The depression saw the market’s leading cryptocurrencies like Bitcoin and Ethereum losing 80-90% of their capitalization within a year. A majority of retail investors, who were holding these volatile crypto assets, decided to exchange them for stablecoins as a part of their risk management strategy. Once the volatility settled, traders were redeeming their stablecoins for digital currencies, as well as fiat currencies to exit the crypto market on minimized losses.
INBOUND INVESTMENTSStablecoins are not exciting as speculative assets, mainly because their backers supply only the portion that they can back against a stable real-world asset. They are highly attractive tools when it comes to retaining the qualities of blockchain-enabled payment networks for, say, remittance and hedging.
The institutional players have begun to realize the potential of stablecoins. As of November, the total investments made into the stablecoin space has touched $3 billion, per Stable Report, a crypto research group. It has led to the introduction of more than 120 stablecoin projects this year.
Winklevoss Twins, for instance, launched a stablecoin for their Gemini bitcoin exchange in September. Circle, a Goldman Sachs-backed crypto group, also partnered with a US bitcoin exchange Coinbase to launch a USD Coin.
DUE DILIGENCEAlmost every new player in the stablecoin market is coming with their audit reports in hand, a record that verifies that the company that intends to issue its stablecoins has sufficient assets to back them. Some coin projects have even introduced features that allow them to freeze or delete coins to tackle money laundering acts.
Popular stablecoin project Tether, meanwhile, has garnered criticism for refusing to get its balance-sheets audited by an independent party. It has enabled a whole new competition to flourish in response, which includes more modern stablecoin projects like TrueUSD, Paxos, and Maker, in addition to Gemini Dollar and USD Coin (as discussed above).
As the regulatory watch improves and companies begin to take due diligence seriously, 2019 could prove to the year of stablecoins. Advocates believe that in the long term, almost all the traditional industries would want to integrate a stablecoin solution.
“Insurance, lending . . . these are some of the categories that could start to grow into the trillions,” Garrick Hileman, head of research at Blockchain crypto wallet company, told FT.Social media giant Facebook has already announced that it would introduce a stablecoin to power p2p payments on its WhatsApp messenger.
Featured image from Shutterstock.
At one point in May, the value of a single bitcoin spiked above $3,000, only to yo-yo back down to around $2,245, before nearly hitting $3,000 again on Tuesday.
A programmer on a Bitcoin Talk forum paid another user 10,000 bitcoin to buy two Papa John's pizzas.
Slowly bitcoin gained adherents - the number of people using bitcoin now "Rivals the population of small countries," Garrick Hileman, an economic historian and research fellow at the Cambridge Centre for Alternative Finance, wrote in a preface to a report on digital currency released in April.
Last week, an analyst for Saxo Bank, Kay Van-Petersen, set a breath-taking target price of $100,000 for a single unit of bitcoin within 10 years, saying bitcoin and other digital currencies will occupy a growing place in global currency trades.
Signs advertising bitcoin acceptance hang in two branches of Tokyo's Bic Camera store, where consumers can summon their bitcoin "Wallets," or accounts, on their smartphones, generate a barcode and make purchases for bitcoins or fractions.
"A lot of Chinese are moving their wealth out of the country using bitcoin," said Dave Huseby, director of security at Hyperledger, an umbrella project run by the Linux Foundation to advance use of the underlying bitcoin technology for other industries.
According to Garrick Hileman, Bitcoin’s next bull run could be triggered by central banks storing digital gold. Banks Could Help Bitcoin Recover Its Price During a conversation at AltFi Podcast, Hileman, the head of research at Blockchain.com and research associate with the LSE, explained that banks stockpiling Bitcoin could end up in a price ... According to Dr. Garrick Hileman, BTC prices are trading at a premium on popular Chinese exchanges like Huobi. The correlation between Yuan and BTC can be seen in the diagram below. It has become more evident in April and May and as the tensions ratcheted up with the weakening of U.S.-China trade relations. Garrick Hileman, an economist and a long-time researcher in the crypto space currently at wallet provider Blockchain.com, says things have changed since the previous halving halving event. Dr Garrick Hileman is a visiting fellow at the London School of Economics and the head of research at Blockchain.com, the leading provider of cryptocurrency solutions and creator of the world’s most popular crypto Wallet and the Blockchain.com Exchange. You can read more of his analysis and research on Twitter @GarrickHileman and @Blockchain. Bitcoin has reliably operated for over 11 years now, ... (eg the physical currency and coins in your wallet/pocket⁵) ... Garrick Hileman on Twitter. Footnotes:
[index]          
A wide-ranging overview of the state of the digital currency economy and blockchain technology from CoinDesk's lead analyst and economic historian at the London School of Economics, Garrick Hileman. Sky News TV Interview with Garrick Hileman, Economic Historian at the London School of Economics, about whether a bitcoin bubble has just burst (4 April, 2013) Durant la conférence LeWeb, qui a lieu en ce moment à Paris, on parle beaucoup de Bitcoin, cette monnaie virtuelle apparue en 2009. Nous avons interrogé Garrick Hileman, économiste de la ... Recorded at the Bitcoin 2013 conference in San Jose, CA. Bitcoin Foundation sponsored this event. Red Pill Recorded recorded this talk. If you find watching this video valuable to you, please ... The state of cryptocurrencies and stablecoins with Garrick Hileman Blockchangers. Loading... Unsubscribe from Blockchangers? ... Bitcoin Live : BTC Backtested A 2018 Support. Will It Be Enough?