The Basic Strategy for Achieving Stable Currency Adoption
Despite the opposition from regulatory bodies and prominent figures, Facebook has decided to establish The Libra Association on October 14th, which has 21 registered members so far. Even though stable cryptocurrencies existed before Libra, they have been brought into the mainstream spotlight since Libra’s emergence and it is expected to have a huge impact on the cryptocurrency market overall.
Due to the enormous volatility of traditional cryptocurrencies, people have become distrustful and unwilling to use them as a daily medium of exchange, so stable cryptocurrencies have appeared in an attempt to solve this problem. As Anchor’s founder and CEO Daniel Popa stated:
”Stablecoins play an important role in resisting volatility and preserving purchasing power, and they are also applicable in areas such as remittances, digitization of sovereign currencies, and the payment of foreign contractors in an evolving free economy.”– Daniel Popa, Anchor’s Founder and CEO
However, in spite of all the benefits that stable cryptocurrencies offer, they are still facing problems regarding regulations in certain countries, so many of them are forced to move their headquarters to other locations, thus driving innovation and employment opportunities out of those countries.
When it comes to this matter, some countries, like Japan, keep up with emerging technologies and emerging markets and are eager to accept blockchain and cryptocurrency projects, while others, like the United States, are rather cautious about this and they have adopted methods to limit them, meaning that stablecoins pegged to the US dollar are acceptable, while stablecoins that use an alternative value peg will be treated differently and viewed as a security, even if their underlying use is as a utility or currency token. Another problem stablecoins are struggling with is that many people think they lack transparency, and the reason people are suspicious is that many stable cryptocurrency projects do not have a reliable auditing system.
So, the best way to tackle the problem of the lack of credibility surrounding stablecoins would be to provide the public with a standardized framework and thus enable complete transparency. By doing this, people will become more aware of the advantages stablecoins have to offer and that will lead to wider global adoption.
Read the original article in Chinese >> https://www.jinse.com/blockchain/502995.html
Title photo by Markus Spiske, Unsplash.