The Next Generation of Cryptocurrencies – the “Stablecoin”
Stablecoins are designed to have a value that is much more fixed than normal cryptocurrencies because they are pegged to other assets, such as the US dollar, the Euro, or gold. The aim is to create stablecoins that can enjoy the benefits of being a cryptocurrency without the associated extreme volatility — this would go a long way to helping cryptocurrencies be seen as a viable way to buy something. Most businesses are not interested in accepting a form of payment that might tank in value the very next day.
Stablecoin demand is surging: the total value of stablecoin assets grew by 495%, according to The Block in the period from October 2020 to October 2021. This reflects the momentum driving the so-called “stablecoin invasion.” There are now more than 200 stablecoins globally, worth nearly $130 bn. Additionally, two US$-backed stablecoins, the Paxos Standard (PAX) and Gemini Dollar (GUSD), have been approved and regulated by the New York State Department of Financial Services.
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