The Rise of Stablecoins: A Key Trend For Crypto in 2019

[Mercury]

As we enter the summer of 2019 with an enormous upswing in crypto prices and general market sentiment, attentions are turning to the key narratives that will shape the ecosystem in the coming months.

One undeniably important trend that has continued from 2018 is the proliferation of fiat-pegged stablecoins. With several new players joining Tether (USDT) last year, and the Tether company (and Bitfinex) itself coming under increasing scrutiny from the media and the New York Attorney General, the space is becoming increasingly competitive and complex.

This month will also likely see the announcement of a Facebook Stablecoin, rumoured to be pegged to a basket of currencies, rather than a single fiat currency - adding a major player to the growing stablecoin landscape.

Many in the existing crypto industry however, are less than excited about the much-anticipated new coin from Facebook. Critics in the crypto community see a digital asset from the tech giant as a fundamental contradiction to the spirit of decentralization that animated the creation of Bitcoin and most cryptoassets. For them, the entry of such a large actor into the ecosystem with a private blockchain is not to be applauded. Moreover, some fear that such privately operated assets may act as competition to the existing cryptoassets and potential new users may be lost to a new generation of corporate coins.

Others more optimistically hope that Facebook’s entry will turn a whole new audience onto Bitcoin and other decentralized cryptoassets, and while they might not embrace Facebook’s coin itself, they hope it will act as the gateway which will get users interested in truly decentralized digital assets.

What seems to be clear however, is that there is a definite and growing market within the crypto space itself for stablecoins and that those within the industry will continue to try and keep users within the crypto sphere.

USDK

One such new stablecoin that has just been announced, is USDK. Launched on Jun 3rd by OKLink,  the new USD-pegged stablecoin was developed and delivered in conjunction with Prime Trust, the registered Trust Company based in Nevada, US.

There are several features that USDK boasts that will draw attention to the new stablecoin. Every USDK is backed strictly by 1 USD, and the funds back the USDK are held in trust by a third-party registered trust company.

It is this feature that will draw attention to the new stablecoin, particularly when investors compare it to the current dominant player in the stablecoin space - Tether (USDT).

A significant problem faced by leading stablecoin Tether  has been the consistent - if as yet unproven - allegations that the stablecoin did not in fact have the dollar backing it claimed. The company has recently clarified that USDT is backed by cash and “cash equivalents,” and there is no evidence whatsoever to date that it has not backed all USDT.

As the market watches new stablecoins closely, therefore, a monthly audit of a stablecoin’s reserves are likely to encourage skeptical investors.

In terms of transparency too, USDK aims to move the needle - the trust company has appointed an auditor to issue monthly reports on the USD balance, ensuring the integrity of the stablecoin.

USDK leverages OKLink’s technical expertise - with the company responsible for developing and managing  the smart contract, including the minting and burning of USDK, under the express instruction of PrimeTrust.

PrimeTrust’s role involves creating, servicing, placing and managing trusts, providing processing funds, AML and KYC compliance as well as transaction technology services.

The new stablecoin also benefits from trading on one of the leading crypto exchanges - OKEx. USDK will be listed on OKEx’s fiat-to-token (C2C) trading platform against six fiat currencies – CNY, VND, GBP, RUB, EUR and TRY, and spot trading platform with 11 trading pairs. OKEx is also launching a 2-week fee-free promotion for USDK, ending Jun 26th.

Stablecoins and Institutions

The rapid growth of stablecoins will undoubtedly prove crucial to the institutional and even retail influx into the cryptoasset that many expect to see in 2019 and beyond. With bitcoin and other leading cryptoassets recovering in price, it is likely that demand will increase for stablecoins as people look for safe on-ramps into the cryptocurrency markets. Reliable, exchange-backed stablecoins therefore, will likely prove crucial to this next stage in the evolution of crypto.

Source

[Peter90]

https://stablecoinindex.com/volume

https://www.tradingview.com/markets/cryptocurrencies/global-charts/

Compare the trading volume increase in the last year of Stablecoins with that of cryptos in general, or of Bitcoin

[Senin]

Yes, the current increase in the number of stable coins is very impressive. I did not even hear about the USDK stable coin. But I especially do not see the need for its existence. The difference is in the full provision of the dollar, instead of 70% of the provision of the dollar in USDT. In addition, the assets of this coin will be held by another trust campaign. Well, well, let's see how it will be perceived by society.

[Noverteno]

Indeed, this year a lot of stable coins appeared on the cryptocurrency market. In general, it is very positive for cryptocurrency, because using stable coins, people will in any case be interested in the usual cryptocurrency. In addition, stable coins create convenience in the use of decentralized cryptocurrency.

[zilzylian]

Stable coins do not have a high price for the investment, but stable coins are great for saving profits from trading Bitcoin and other Altcoins, there are many stable coin platforms like QDAO, and I think by 2019 there will be lots of stable coins in every crypto exchange

[Peter90]

A significant problem faced by leading stablecoin Tether  has been the consistent - if as yet unproven - allegations that the stablecoin did not in fact have the dollar backing it claimed. The company has recently clarified that USDT is backed by cash and “cash equivalents,” and there is no evidence whatsoever to date that it has not backed all USDT.

USDT was supposed to be backed by cash in the bank.
Saying that USDT is partly backed by cash equivalents, clearly contradicts the original idea and the reason why many people bought Tether.
(What does the company mean by cash equivalents?)

[jonathancool220]

Like if a stable coin won't become a trend even though it's as expensive as an unstable coin.

We can compare with Bitcoin that is not stable then the results also have high Hive and high trending.
Ethereum also has a high Hive and Ethereum is also an unstable coin and that's special proof of both cryptocurrency.

[AvesLAher]

It depends on target you shoot. The best pellets for Edgun are JSB, but Crosman will also be fine. I quess, U use your Lelya for hunting?

[Fenix]

Yes, stable coins are developing very fast this year and their number and popularity is growing rapidly. As a means of payment, stable coins can even be better than a decentralized cryptocurrency. Stable coins and a decentralized cryptocurrency still retain their characteristics and they are very significant in order to continue to develop separately. However, it seems that as a means of payment, they will continue to compete with each other.

[Uina]

I might have been really outdated as I only focused on Bitcoin.

Is stable coin something to keep the balance between crypto and fiat? Can someone explain in layman's term, this is kinda new to me.

[Peter90]

I might have been really outdated as I only focused on Bitcoin.

Is stable coin something to keep the balance between crypto and fiat? Can someone explain in layman's term, this is kinda new to me.

If you know Bitcoin, you should know the problems connected with Bitcoin's volatility, and in general with the volatility of cryptocurrencies: how it hinders Bitcoin and cryptos to be used in everyday life by normal people and businesses as a means of payment.

Stablecoins aim to be the answer to that problem.

[Alcor]

Stable coins have now begun to play a very significant role in the cryptocurrency market. After Zuckerberg announced his intention to issue the Libra global stable coin, this prompted many states to create their own national stable coin. First of all, it concerns China and its stable coin CBDC, as well as statements by the US government about its intention to create its own stable coin. Apparently, they realized that if they continue to be cautious about cryptocurrency, then this market will be occupied by others. Moreover, the new currency as a means of payment can be controlled by private business, which is not very normal for the currency.
In general, this is very good for a decentralized cryptocurrency, since this process significantly increases the interest of people in it, but on the other hand, stable coins are very serious competitors to a decentralized cryptocurrency as a means of payment.

[Senin]

It looks like next year will be more fruitful with stable coins. About 70 percent of states announced their intention to issue their own national stable coin. If such coins appear, and it will be actually the digitized currency of these states, many will switch to using it as a means of payment. Decentralized cryptocurrency is not yet widely used as a means of payment, and therefore stable coins of states can not only be their competitors, but also inhibit the use of cryptocurrency as a means of payment.