Stablecoin Emerge: Libra Coin, JPM Coin, and BUSD
There are a few big-time industry leaders who are venturing into the world of Stablecoins. Facebook, with its Libra Coin project, came as a shock for many, a coin that will be backed by many other big-time companies. The well-known J.P Morgan, after his emphatic rejection towards cryptocurrencies, is now the first bank to launch its own. JPM Coin will be available for Chase bank clients as a means of digital payment option. Recently, I read Binance, famous crypto exchange, announced they would be launching their own Stablecoin named BUSD the coin will be backed by USD. “BUSD is being built in association with Stablecoin issuer Paxos, which will serve as its issuer as well as custodian of fiat reserves. “Paxos is leading the digital trusts space, and we are excited to work with them in developing our native Stablecoin,” said Binance CEO, Changpeng “CZ” Zhao.”
Many say that Stablecoins go against Bitcoins original purpose, eliminating third-party entities regulations, Stablecoins can be pegged to a specific asset or fiat currency thus also dependent on that assists economy and regulations.
The idea of Stablecoins is interesting because it may be more comfortable for people to move from fiat to a Stablecoin, instead of a regular cryptocurrency. Users may feel more confident investing in something that is back by a fiat currency that they are more used to using.
I believe one of the biggest things people struggle with when it comes to crypto, besides the use and understanding of its technology; it is hands down the volatility. People are scared of investing and losing money. It is understandable because crypto has had the tendency to fluctuate but also rise significantly. Nonetheless, all investments have a certain amount of risks involved; and crypto is no exception; the only difference is that crypto is often in the eye of the hurricane.
According to Investopedia, "Stablecoin refers to a new class of cryptocurrencies which offer price stability and/or are backed by reserve asset(s). In recent times, Stablecoins have gained enough traction as they attempt to offer the best of both world’s – the instant processing and security of payments of cryptocurrencies”.
Up until recently one of the most popular Stablecoin created by owners of crypto exchange Bitfinex; stable coin Tether a coin backed by USD. Tether went through some drama back in 2018 with speculations of bitcoin price manipulation. On June 13, 2018, John M Griffin and Amin Shams from the University of Texas released a study that investigates whether Tether, a digital currency linked to the U.S. dollar, had influenced Bitcoin and other altcoin prices during their peaks. Curiously on the same day, Bitcoin hit its lowest rate in the past three months. The study was carried out by analyzing blockchain data, where they found that purchases made with Tether were timed following market downturns, and the result of this noticeably increased Bitcoin prices. Finally concluding that Tether was being used to provide price support, thus manipulating the value of bitcoin. I believe one way or another this may have overshadowed this particular Stablecoin, but mostly it is unfortunate to think crypto might have been tampered with.
You may or may not be a fan of Stablecoins; the truth is nowadays, there is room for everyone in this space. I believe these types of coins have to exist as an option for those who are more reluctant towards crypto. JP Morgans coin undoubtedly shows signs of feeling the need to target different markets; it might not be 100% bitcoin protocol but for many, it may be a step closer towards digital money adaptation and hopefully one step closer into cryptocurrency.
I hope you enjoyed it.
By: Carolina Pérez