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3 Stablecoins Everyone Should Know

You may be familiar with the term stablecoin. But because it is a relatively new type of cryptocurrency, you may not be familiar with what it is.

So what is it? Why is there so much fuss surrounding these coins and what are the stablecoins you should know about?

Let’s dig in!

Stablecoins: What On Earth are They?

In its most simple terms, a stablecoin is a cryptocurrency that is pegged to a tangible, or stable, asset. Examples of a stable asset include gold or the US dollar. The idea of backing a cryptocurrency with a tangible asset is to reduce the price volatility associated with standard cryptocurrency. In doing so, digital coins become far more practical for everyday use, and it may encourage global adoption.

Cryptocurrency Volatility

Standard cryptocurrencies such as Bitcoin have high volatility. On any given day, the value can suddenly increase or decrease (often by significant percentages) for no apparent reason other than market hearsay or fear mongering. This is because the value of Bitcoin, and other cryptocurrencies, depends on what value is given to it by investors. It does not depend on a physical asset to determine its worth. Because of this, Bitcoin and most cryptocurrencies are inconvenient for daily transactions.

Imagine this: You are a vendor, and you sell a dress in exchange for 300 RPX. At the time of the transaction, 300 RPX could be worth $35 USD. However, the next day that same amount of RPX could now equal $23 USD. You wouldn’t be a very happy vendor. Further, you would be consistently aware of the ever-changing value to which your wares are a victim too.

Price changes like this are shocking for merchants and consumers alike. But the adoption of stablecoins may be a catalyst to the decentralized cryptocurrency system working mainstream.

>> Are Stablecoins the Future? The Winklevoss Twins Seem to Think So!

Stablecoins Offer an Optimal Currency

The goal is to create an optimal currency.

According to Forbes“an optimal cryptocurrency should have the following four traits: price stability, scalability, privacy, and decentralization.”

Price stability is the key trait, and this is what a stablecoin aims to achieve. As Forbes explains further, “Short-term stability is important for transactions and long-term stability is important for holding.”

So let’s look at some examples of stablecoin projects aiming to create the optimal cryptocurrency.

Tether: The Pioneer

You can’t talk about stablecoins without giving a nod to the pioneer. Tether is notable because it’s widely considered the first stablecoin.

1-to-1 USD

Tether claims it is 100% backed by fiat currency held in a reserve bank account. It is said to be backed 1-for-1 to the US dollar, with 1 Tether being equal to $1 USD. It will remain fully backed once all Tethers in circulation are less than or equal to all the fiat held in the reserve.

stablecoin

Most Established but Controversial

As it is the pioneering stablecoin, Tether is the most established and is well-integrated. However, Tether has faced controversy in the past, as its claims have not been legitimately proven. The company’s terms and conditions state that “Tether reserves the right to refuse to issue or redeem Tether Tokens.”

Some fear this statement gives the company credence to not redeem the currency at the 1-to-1 value it claims.

uBUCK: The All-in-One Convenience

uBUCK is a digital currency wallet that has fiat capabilities.

According to its website, uBUCK enables you to “pay people with uBUCK cash with lightning speed, make purchases online at approved merchants or withdraw cash at the ATM.”

With the ability to buy uBUCK Cash using either Bitcoin or Ethereum cryptocurrencies, a user is effectively “storing” their cryptocurrency in a stablecoin that is tied to the US dollar.

>> Circle and Coinbase Launch Their Joint Stablecoin USDC

How Does It Work?

It works like this: A user buys a prepaid uBUCK voucher from the uBUCK mobile application. As stated, you can use BTC or ETH to buy, but regular fiat credit and debit purchases are also accepted.

stablecoin

Users then load the uBUCK Debit MasterCard (linked to the uBUCK wallet) with their voucher credit, effectively converting the uBUCK Cash into dollars by doing so. This then means ATM withdrawals and regular shopping around the globe is possible with the uBUCK MasterCard.

Wallets

uBUCK comes with four secure wallets. These are the uBUCK Cash Wallet, a Bitcoin wallet, Ethereum wallet, and the USD Debit card. By having a multi-functional wallet, a user can manage their digital and fiat currency in one convenient place. Then, as stated, by using the uBUCK app, the wallet enables users to store, convert, and spend their fiat and cryptocurrencies.

Free Money Transfer

Another interesting feature of this platform is that users can send uBUCK vouchers to other recipients anywhere around the world for free. Essentially, the service allows free money transfers in only a few minutes.

MakerDao: Complex but Transparent

Maker is a decentralized autonomous organization, and its stablecoin is called Dai. Pegged against the US dollar, Dai operates on the Ethereum blockchain and, as such, it is transparent.

Asset Collateral

Each Dai is worth $1 USD, and the website states that “Every Dai is backed in excess by collateral at all times, so you never have to worry about its value moving up or down.

Further:

“Every Dai is backed by another asset of value. Our collateral portfolio is diversified, allowing multiple assets to guarantee the value of each Dai.”

stablecoin

Ethereum Blockchain

The system is said to be quite complex. To receive Dai, you have to first send your ETH tokens to the Maker platform where they will be “locked up.” Then using the Ethereum blockchain, Maker maintains stability by an autonomous system of smart contracts.

According to its website, Dai offers freedom from volatility:

“Dai stands to transform the financial industry by creating a stable and decentralized currency that will allow businesses to realize the future of money.”

>> Facebook Cryptocurrency: Is the Tech Giant Developing a Stablecoin?

The Takeaway

Stablecoins can bring stability to the crypto world and offer real potential for global adoption. The key is to create the optimal cryptocurrency inclusive of price stability, decentralization, scalability, and privacy.

The technology is still relatively young and will continually evolve, but it is clear that demand is there. People are looking for the balance between a decentralized payment network and stable value.

Everybody wants to feel secure in their transactions and know that they won’t lose value on their assets for no reason other than market hype.

We’ve mentioned only a few stablecoins here. There are more out there! Do you have any favorites? Do believe the technology will work and bring us towards that optimal currency?

Let us know below!

Featured image: DepositPhotos © zim90

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JPM coin

JPM Coin Fails to Impress Ripple’s Brad Garlinghouse… Again

Ripple CEO Brad Garlinghouse has spoken out about JPM coin once again. This time, he gave the major US bank some praise for its new venture. Garlinghouse participated in a fireside chat yesterday at the 4th annual DC Blockchain Summit in Washington D.C. where he further discussed his views of the new bank coin.

Brad Garlinghouse and JPM Coin

In the chat yesterday, Ripple’s CEO said that JPMorgan Chase’s entrance into the cryptocurrency community is a good thing. However, that was the only positive thing he said about the new JPM coin. Garlinghouse is sticking firm to his original stance on these new bank stablecoins, claiming they will ultimately cause more chaos.

JPMorgan Chase announced the news of its new stablecoin back on February 14th and Garlinghouse was one of the first major executives in the cryptocurrency space to chime in.

In the tweet above, Garlinghouse linked a post he wrote back in August of 2016 regarding his view of the potential future of bank coins. It seems his prediction is coming true. The CEO’s argument is that if banks start making their own stablecoins, like JPM coin, it will make the financial system far more dysfunctional than the current one.

Garlinghouse believes that the current financial system lacks interoperability and each bank adding its own stablecoin will not solve this problem. In the fireside chat yesterday at the DC blockchain summit, Garlinghouse described a system shifting to exactly what he predicted in his article.

>> Crypto News: Huobi Adds XRP and IBM Releases X-Force Red

He explained:

“This guy from Morgan Stanley was interviewing me last week, and I asked him, so is Morgan Stanley going to use the JPM Coin? Probably not. Will Citi use it? […] Will PNC? And the answer is no. So we’re going to have all these different coins, and we’re back to where we are: there’s a lack of interoperability.”

It’s clear that Garlinghouse firmly believes in his company and what they offer financial institutions. To an extent, he has a very valid point, but it seems these major US banks want nothing to do with XRP.

Why do you think banks aren’t adopting Ripple and XRP? Is it that XRP isn’t a ‘stablecoin’ like JPM coin is? Do you think they want their own control and power over the system? Leave your comments below!

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JPM Coin

Could Consumers Use the JPM Coin One Day? Maybe

JPMorgan Chase held their annual investor day yesterday. The company’s CEO, Jamie Dimon, was involved in a question-and-answer session and answered a few questions about the bank’s latest venture, the JPM Coin. The world’s first bank coin was originally meant for cross-border remittances, but it seems the bank may have other ideas for it down the road.

JPM Coin for Consumer Use?

During his Q&A session, Dimon explained that he believes the coin could be used in various sectors of the financial industry. “JP Morgan Coin could be internal, could be commercial, it could one day be consumer,” said the CEO.

Two weeks ago, the US major bank announced the news of its JPM coin. It was a shock to much of Wall Street and the cryptocurrency community. Dimon has been a long-time critic of Bitcoin and has even gone as far as calling the digital currency a fraud.

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When the news was released, critics began immediately chiming in—including Ripple’s CEO Brad Garlinghouse. Garlinghouse feels that if every major bank were to adopt its own bank coin, it would make the world’s financial system far more flawed than the current one using SWIFT. The new JPM coin would be in direct competition with Ripple and its underlying cryptocurrency XRP. Ripple, via XRP, does exactly what JPMorgan is trying to accomplish.

Now, JPMorgan wants to expand the coin’s use far beyond what was originally released. From the original announcement, JPM coin was designed to settle transactions between clients of its wholesale international payments business. The blockchain, they believe, will speed up this process.

Currently, the digital currency is being tested in a trial run with a few corporate clients, as well as internally in the bank. At this time, consumer use of JPM coin seems in the idea stages, but if major banks start making their own stable coins, the idea could be pushed further.

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JPM Coin

JPM Coin Launches | JPMorgan Launches First US Bank Cryptocurrency

The first digital currency created by a major US bank is finally here! This morning, CNBC was first to report that JPMorgan Chase has officially launched its own cryptocurrency. The first JPM Coin trial is set to launch in just a few months.

JPM Coin Makes Trial Debut

JPMorgan Chase moves more than $6 trillion around the world a day and soon the company will test its new JPM coin. The bank’s new digital currency will be tested to settle payments between its clients.

JPMorgan’s trial will start small but it’s the bank’s way of preparing for a future that blockchain is the main technology in the banking system. JPM Coin will focus first on international settlements by major corporations, hoping to improve the current SWIFT system. Essentially, JPMorgan will try and accomplish what Ripple is doing with RippleNet and XRP.

“So anything that currently exists in the world, as that moves onto the blockchain, this would be the payment leg for that transaction,” said Umar Farooq, head of JPMorgan’s blockchain projects. “The applications are frankly quite endless; anything, where you have a distributed ledger which involves corporations or institutions, can use this.”

JPMorgan’s CEO Jamie Dimon has been a long-time cryptocurrency doubter, which makes this movement and the new JPM coin a bit surprising. Dimon has even gone as far as calling Bitcoin a fraud.

The world’s first digital currency was birthed by Satoshi Nakamoto due to the financial crisis in 2008. The crisis was started by the US’s major banks, including JPMorgan. Bitcoin was made to disrupt the established banking world.

When these new international payments are tested, it will be one of the first real-world applications for cryptocurrency in banking. Each JPM Coin will be redeemable for a single USD, making it a so-called stablecoin.

Cryptocurrency Price Movements

According to CoinMarketCap, the news hasn’t really affected the price of digital currencies as much as you would think. Usually, when big news strikes like this investors buy in, but that’s not the case today. At the time of writing, BTC is trading at $3,616.83 a coin, down -0.30%. Coins in the top 50 digital currencies are seeing slight gains and losses.

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Stellar (XLM) the Latest Cryptocurrency Added to Grayscale

Grayscale, a cryptocurrency investment group, has just announced that it has launched its latest fund. This new fund is dedicated specifically to Stellar (XLM).

Grayscale Adds Stellar (XLM)

Grayscale is a digital asset management firm that operates under the Digital Currency Group umbrella. Before the addition of Stellar, Grayscale held eight other digital currency trusts.

The trusts now include:

  • Bitcoin (BTC)
  • Bitcoin Cash (BCH)
  • Ethereum (ETH)
  • Ethereum Classic (ETC)
  • Horizen (ZEN)
  • Litecoin (LTC)
  • Stellar (XLM)
  • XRP
  • Zcash (ZEC)

“We are pleased to bring Grayscale Stellar Lumens Trust to market and will continue to provide investors access to established blockchain projects with substantial traction and resources,” said Michael Sonnenshein, Managing Director of Grayscale. “Grayscale has established a leadership role in this emerging industry and the launch of this product will expand our coverage of the digital asset universe.”

The Grayscale Stellar Lumens Trust is now the first single-asset investment product that provides investors with exposure to Stellar (XLM). Stellar Lumens, or XLM, is the native digital asset of the Stellar Network.

>> Binance Freezes Tokens from Hacked Cryptopia Exchange

Sonnenshein spoke to Fortune about his views on the Stellar Network. The Director of Grayscale believes that Stellar is in a good position to be used in the world and believes the theory behind the project is sound. Specifically, Sonnenshein believes that the working capital aspect of the Stellar Lumens network is what will make it more appealing to banks.

The current banking system requires each major bank to hold large reserves of currencies in foreign banks, but being able to bring those balances of foreign currencies into working capital is what the Grayscale Director finds to be extremely valuable.

Currently, Grayscale also holds XRP, which is Stellar’s competitor. However, Ripple’s network is geared more towards banks, while Stellar (XLM) hopes its project will be used for just about anyone. Specifically, smaller businesses.

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