HomeCryptoStablecoins As A Real Threat To Bitcoin

Stablecoins As A Real Threat To Bitcoin

Despite the fact that Bitcoin is still the most talked about and most valuable cryptocurrency in terms of market capitalization, the truth is a bit more nuanced. It’s tempting to believe that PayPal’s decision to enable consumers to use bitcoin as a form of payment is the only big event in the crypto world.

Increased interest in stablecoin and less in Bitcoin

bitcoin btc
Bitcoin is shifting in favor of stablecoins. Financial stability is promoted

So far, the discourse has been dominated by bitcoin while new cryptocurrencies and cryptocurrency applications arise and grow fast. This, of course, leads to headlines and attention, as well as an increase in interest in financial matters and discourse. Stablecoins, the supposedly more commonplace kind of cryptocurrency, seems to be the most likely manner by which it will be mainstreamed and used.

Stable coins may be defined as digital currencies that are linked to an underlying asset. The U.S. dollar seems to be a popular asset to stabilize cryptocurrencies with, although stablecoins may be backed by nearly any asset. While the stablecoin segment of the crypto market has risen rapidly, since 2018, what does this indicate for the future of blockchain and crypto-assets as a whole?

Stablecoins will be the real driving force behind crypto’s future growth, even as Bitcoin reaches new highs and corporations continue to indicate bitcoin in their financial statements. Stablecoins may soon become as popular as BTC or even more. For this reason, the demand for AI tools that allow traders to make their BTC trading automated will increase as well. However, as a consequence, the number of scams like Bitcode Prime expanded in the crypto industry. This means that investors need to be careful until they start trading with a certain AI tool. In order to not become a victim of malpractice there are several things to take into consideration, including licensing and the benefits you can get from the company. If the promised benefits seem quite unrealistic, most probably, it’s a scam and you should find another reputable and credible company for implementing your strategy and gaining profits. 

Reasons Why Stablecoins May Become More Popular Than BTC

Less volatility is one of the main reasons why stablecoins may become more popular. Stablecoin’s decreased price fluctuations are a key feature that will continue to draw attention from both individuals and institutions. It’s hard to stress the importance of the price discovery process for Bitcoin, both for present holders and for those trying to incorporate Bitcoin and another crypto into the larger financial system. Given the recent bull run and the continuous setting of all-time price highs, how many existing bitcoin holders will be willing to utilize bitcoin as a currency? If they work as stated, stable coins are a good solution to this issue.

It’s possible that stablecoins might have a significant influence on the crypto market if they are utilized as a legal currency alternative. There is still a lot of attention paid to Bitcoin, but it seems the rest of the crypto industry is moving beyond merely following the price of Bitcoin on a daily basis to something more complex.

While Bitcoin will continue to play an important role in the crypto industry other technologies, such as stablecoins, may be better positioned to drive blockchain and crypto adoption. It’s also possible that Bitcoin – for all the innovation it’s spurred – hasn’t played as much of a part in the development of some of the more recent uses. Decentralized finance and non-fungible tokens aren’t as intimately linked to Bitcoin as stablecoins and other newer cryptocurrencies are, specifically. 

Stable underpinnings are required for several promising use cases in the crypto and blockchain industry. Because of their lower volatility, stable coins are becoming more and more popular as a starting point for innovative blockchain and crypto applications.

Cryptocurrency must be liquid, have minimal price volatility, and be integrated with existing financial institutions in order to be a viable currency alternative. Most lately, Visa has been making news about this trend. It seems this change has already begun and is well underway.

Even only a few years ago, it was difficult to forecast how the crypto application and use cases would evolve. The original promise of crypto may now be coming to fulfillment, which is one of the most exciting news stories and headlines related to blockchain and crypto. Cryptocurrency implementation is heading toward a bright future thanks to the recent introduction of Visa’s stablecoin pilot program.

Upgrading Money

Public and private money coexist in modern monetary systems. Cash and digital claims against the central banks are examples of public money. Deposit claims against commercial banks are included in the concept of privately held money. Up to 95% of the money in modern countries is private, even though the government is responsible for maintaining monetary stability.

Using stable coins is a way to keep your money secret. The notion of separating monetary and credit operations has been around for around 80 years now. Blockchain technology has the potential to enhance the role of both the public and private sectors in the supply of money by decreasing the cost of digital verification. The private sector is likely to be more effective in serving the public’s demands and expanding choice than the governmental sector is in connecting directly with consumers and companies.

To be successful in this change, the public and private sectors must strike the correct balance. More emphasis on the public approach will lead to slower time to market, less competition, and less innovative solutions for problems. Moreover, they will not be able to develop the next generation of financial technology leaders. 

Giorgi Mikhelidze
Giorgi Mikhelidze
Giorgi is a Georgia software developer with two years of experience trading on the financial markets. He is now working to spread the knowledge about the Blockchain in his country and share all of his findings and research to as many crypto enthusiasts as possible.