The Rise of Stablecoins
Stablecoins are cryptocurrencies whose value is pegged to a fiat currency like the US Dollar. Their main advantage is price stability. By design, they eliminate much of the volatility intrinsic to cryptocurrencies like Bitcoin. It is hoped that their enhanced stability will attract a wider audience and usage in society.
Libra vs. Venus
There has been a flurry of announced new stablecoins of late. Facebook announced that it will launch a global stablecoin (Libra) whose value will be determined by the weighted value of the top five global fiat currencies. Binance, the world’s largest cryptocurrency exchange by trade volume, announced their Venus stablecoin. Binance’s Venus coin will be localized per country meaning that there would be a different version of Venus coin for each country. Binance’s Venus project will compete directly with Facebook’s Libra stablecoin. Only time will tell which stablecoin gains the greatest market share.
Ripple Adds A New Partner for Remittance
Another start-up company, called Xendpay, is partnering with Ripple, the third largest cryptocurrency by market capitalization, to enable cross-border remittances using RippleNet blockchain. The partnership between Xenday and Ripple targets remittance payments and is in direct competition to the primary target market of Facebook’s Libra coin. With this partnership, the use of Blockchain for remittances is heating up with both small and major players highlighting the speed and low-cost benefits of a Blockchain-based remittance system.
Tether to Launch New Stablecoin Pegged to Chinese “Renminbi” Currency
Tether, a company that launched the stablecoin USDT two years ago, is now launching one called CNHT which will be pegged to the Chinese Yuan. Many Chinese-based cryptocurrency traders have been using the USDT stablecoin to bypass regulatory restrictions imposed by China for purchasing cryptocurrencies. Chinese traders would first buy USDT, and then use the USDT (whose value is directly pegged to U.S. dollars) to purchase other cryptocurrencies like Bitcoin.
More Stablecoins to Come
Stablecoins are increasingly being used to address the slow speed and high costs associated with settlements of fiat currencies, cross border transactions and remittances. We predict further stablecoin releases in the coming months.
Chief Executive Officer