Stablecoins to Play Key Role in Crypto Adoption, Says New Report
Stablecoins will play a key role in mainstream adoption of crypto technologies, according to a report published by California-based stablecoin startup Reserve on Wednesday, Feb. 20.
The report, entitled “The State of Stablecoins 2019: Hype vs. Reality in the Race for Stable, Global, Digital Money” is based on information collected from 40 crypto and stablecoin firms. The report’s lead author is George Samman, a blockchain and cryptocurrency advisor. According to the document, Samman “was commissioned to research the stablecoin landscape and then independently report his findings for the broader industry to learn from.”
The analysis is presented by a number of major industry players, including Reserve, Arrington XRP Capital and Blocktower.
The study analyzes the key features of stablecoins which, the authors believe, can contribute to the mass adoption of crypto technologies:
“The development of stablecoins, price-stable cryptocurrencies, asset-backed cryptocurrencies etc. is likely to play a critical role in how this new economy achieves mainstream adoption.”
Furthermore, the authors believe that developing countries with hyperinflation, such as Venezuela and Angola, will be the first to adopt stablecoins, while others will follow. Additionally, stablecoins potentially promise to be a multi-trillion dollar marketplace, the report states.
The report further notes the potential role of major companies such as Facebook in facilitating the adoption of stablecoins. Late last year, reports surfaced that the social media giant is considering launching a stablecoin for WhatsApp users.
As for the near future of stablecoins, the authors believe that the United States dollar will be “the most tokenized liquid asset in the cryptocurrency space in the next 12 to 24 months.”
However, in another one of its conclusions, the report ventures that if a massively adopted stablecoin is pegged to dollars, it could increase the total supply of fiat money and thus contribute to inflation and further instability. According to the report, price-stable coins will rather be based on various assets, rather than on national currencies. The authors conclude by describing the an ideal model for future stablecoins:
“The ideal stablecoin should be able to withstand market volatility, be affordable to maintain within a value range, have easily comprehensible stability parameters and be easy to observe for traders and other market participants.”
Major crypto enthusiasts bet on stablecoins as a less volatile and more predictable cryptocurrency that could possibly draw the attention of institutional investors. The Winklevoss twins, who earlier launched their own dollar-backed stablecoin, the Gemini dollar (GUSD), believe that stablecoins and tokenized securities are the future of crypto innovation.
Bitcoin Association Switzerland board member Luzius Meisser said earlier this month that “stablecoins are a precondition for average companies to bring their equity onto the blockchain.”
Last week, U.S.-based financial giant JPMorgan Chase announced that it is developing its own USD-pegged stablecoin, JPM Coin, to increase the efficiency of international settlements.