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Are they Viable? Berkeley Economics Prof Doesn’t Think So

Stablecoins are becoming popular. There’s no denying it; a number have hit the market this year. In fact, just yesterday, the Winklevoss twins announced the Gemini Dollar—the first-ever regulated stablecoin.

Not to mention Carbon launched CarbonUSD, a US dollar backed stablecoin, today.

And yet, despite the crypto market displaying optimism around the latest trend in the industry, one Berkeley Professor provided an alternative view.

He said there is no indication that stablecoins are viable.

Berkeley Professor Talks Stablecoins

Stablecoins are cryptocurrencies pegged to a stable asset. That’s as simple as it gets. The Gemini Dollar, for instance, created by Gemini Trust Co (Tyler and Cameron Winklevoss’ company) will be pegged to the USD at 1:1.

But Barry Eichengreen, Economics Professor at the University of Berkeley, said that just because these coins can be pegged to reserves of fiat currency doesn’t mean they are “viable.”

Sure, he admits that stablecoins appear to solves problems of conventional cryptocurrencies, like Bitcoin (BTC). With these digital currencies, trading prices are volatile, making their purchasing power unstable.

Further, Eichengreen said that because their value is “stable in terms of dollars or their equivalent,” stablecoins are attractive as:

  • Units of account
  • Stores of value

However, according to Eichengreen, “this doesn’t mean that they are viable.”

Changing the Mind of the Crypto Market

It seems unlikely that Eichengreen’s comments will cause the crypto market to see a disappearance in stablecoins. Yesterday, a well-known crypto player said the Gemini Dollar is a sign that the industry is maturing.

>> Carbon Launches CarbonUSD: US Dollar Backed Stablecoin

Meanwhile, Tyler Winklevoss said that the Gemini Trust stablecoin will solve both trust problems and computer science problems.

So the question is: who should we, the people, believe?

Divided

Like with most new things, watch from afar before jumping in. How the Gemini Dollar does on the market will be an indication of how trustworthy stablecoins are. If it flops, perhaps you’ll be siding with Professor Barry Eichengreen.

Featured Image: Depositphotos/© AndreyPopov

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Crypto Project Carbon Launches Stablecoin CarbonUSD

Crypto project Carbon is launching its own stablecoin called CarbonUSD.

According to its website:

“Carbon is a price-stable cryptocurrency that is creating a more efficient and inclusive global economy.”

The coin will be based on the Ethereum network and is said to be backed one-for-one by the US dollar. Its arrival comes a week after the release of two competitor stablecoins, the Gemini dollar and Paxos Standard. What’s all the fuss about stablecoins?

Stablecoins

Stablecoins have become a more popular crypto release of recent months. Designed to bring stability to such a volatile market, the idea behind them is needed. But do they really deliver?

A stablecoin is a cryptocurrency that is backed by a tangible asset. So in CarbonUSD’s case, that tangible asset is the dollar. For every one CarbonUSD coin, you get one US dollar.

The positive of this model is that no matter how the market fairs, your stablecoin will always hold the same value as the asset it is backed by. Therefore traders can buy in and buy out easily knowing the value of the coin will not change.

Anyone familiar with cryptocurrency knows that this is a big issue with digital coins, whose value is usually backed by nothing but market hearsay and speculation.

The primary stablecoin is the Tether coin. But unfortunately, doubts surround the validity of the one-for-one claims about the worth of this coin.

CarbonUSD

So trust in this sector can be hard to establish but with so many new stablecoins appearing, the crypto project Carbon is unfazed, reiterating that “CarbonUSD will undergo frequent third-party attestation to verify that each token is one-to-one [dollar to token] backed. We really want to create a token that’s transparent, compliant.”

The new “price-stable” coin was released today and is available for institutional accounts, hedge funds, traders, and exchanges. In the meantime, the company is still actively looking to get CarbonUSD on more exchange listings.

>> New Security Tokens Trading Platform: Binance and Malta Stock Exchange Sign MOU

The team is predicting that CarbonUSD will reach a $1 billion market cap. If so, Carbon will transition to a “hybrid algorithmic model.”

Miles Albert, the co-founder of Carbon, stated:

“We’ve already developed our algorithmic scale model, we’ve already done simulations as well, to test the resilience of our model. From an algorithmic standpoint, we plan to whitelist our ‘metatoken’ structure after CarbonUSD has reached sufficient scale and liquidity.”

Would you buy a stablecoin? Is CarbonUSD going to be a more reliable coin than say, Tether, do you think?

Featured Image: carbon.money

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