Brian Armstrong: stablecoins pegged to fiat aren’t stable
Brian Armstrong: stablecoins pegged to fiat aren’t stable
Stable Coin

Brian Armstrong: stablecoins pegged to fiat aren’t stable

By Stefania Stimolo - 20 Sep 2021

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Brian Armstrong, CEO of Coinbase, raised the issue of stablecoins pegged to fiat currencies on Twitter, describing them as inflation coins and therefore not stable. 

Through his tweet, he asks the interested community for new ideas on how to create a new concept of stablecoin, understood as truly stable.

Brian Armstrong and the stablecoin anchored to “purchasing power”

Responding to Armstrong’s question, among many others, is the tweet of Yoni Assia, founder and CEO of the trading platform eToro.

“If fiat backed stablecoins really become inflation coins (not so stable), then how will we get a coin that is truly stable? Perhaps something that tracks a basket of real world goods (purchasing power parity) using oracles? Ideas welcome”.

“BigMac Coin!”

The CEO of Coinbase in addition to raising the issue of stability of stablecoins pegged to fiat, invites the community to consider whether this could be linked to the purchasing power of a basket of real-world assets.

Assia of eToro, perhaps ironically or perhaps not, responds with “BigMac Coin”, thus proposing a new idea of stablecoin pegged to a basket of goods that could be hamburgers.

According to this new concept of stability, the current idea of stablecoin linked to fiat, which proposes the same inflationary problems as legal tender, would be no more, and a new solution of stability based on the purchasing power of a basket of goods would take over.

Jack Dorsey stablecoin
Jack Dorsey

Jack Dorsey and Michael Saylor: Bitcoin as a stablecoin solution

Jack Dorsey, the CEO of Twitter and Michael Saylor, CEO of Micro Strategy also responded to the question, supporting the idea that the “stability” solution is in Bitcoin (BTC), albeit in a different way:

“Bitcoin fixes this”.

“As consumers lose faith in their local currency as a medium of exchange they will convert their working capital to USD stable coins. As they lose faith in cash & credit as a store of value they will convert their savings into BTC. #Bitcoin is the solution for wealth preservation”.

Armstrong: Bitcoin is not a stablecoin because it is deflationary

And while fiat currencies wouldn’t qualify as “stable” stablecoins because of inflation, the queen of crypto Bitcoin (BTC) wouldn’t either because it’s deflationary. 

That, at least, is what Armstrong claims in his response to the pro-queen crypto tweets:

“Bitcoin is deflationary, which is also very important. But that’s not the same as having flat pricing – which is useful for long term contracts, trading pairs etc.

Do you think Bitcoin will eventually stabilize in terms of purchasing power?”

“Given the amount of Bitcoin is finite, and population/economy will keep growing, seems unlikely”.

This is not the first time Armstrong has dealt with crypto topics directly with the community on Twitter. Last month, the CEO of Coinbase had expressed his opinion about the infrastructure bill in the US.

 

Stefania Stimolo

Graduated in Marketing and Communication, Stefania is an explorer of innovative opportunities. She started out as a Sales Assistant for e-commerce, and in 2016 she began to develop a passion for the digital world, initially in the Network Marketing sector, where she discovered and became passionate about the ideals behind Bitcoin and Blockchain technology, which lead her to work as a copywriter and translator for ICO projects and blogs, and organize introductory courses.

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