Stablecoins have become the talk of the town since the Tether FUD that circulated a few days back. As Tether imploded, owing to the uncertainty revolving around its peg with the U.S. dollar, more and more people started questioning about the usage and credibility of stablecoins overall.
So how helpful stablecoins are for the crypto market and the general adoption of cryptos? In order to get an expert opinion on this matter, BlockPublisher got in touch with the founder of Morgan Creek Digital, Jason A. Williams, who gave a brilliant insight regarding their usage and explained why stablecoins carry so much importance as of now.
Giving his insight regarding stablecoins, Jason stated:
… stable coins are super important. They allow for transactions to occur with some predictability. Early on I tried to do transactions in bitcoin and people would not / could not agree on the price. It was madness. Still is.
Adding on to this Jason further explained:
I tried to buy some mining rigs and the guy wanted BTC for them. I agreed on the value of the rigs but we couldn’t agree on the price of BTC even though it was trading at x some price that day. There were 2-3 hundred dollar variations from different indexes and then the price would move so quickly we couldn’t spot it.
The volatility that is associated with the world of cryptocurrencies is very high. Huge price spikes and drops are seen in the prices of cryptos in a matter of hours, and even the leading giant bitcoin isn’t safe from this problem.
Owing to such sudden changes in prices, it becomes difficult for people to perform actual real-life buying, selling etc. with cryptos. Stablecoins, on the other hand, provide relatively accurate prices. They can be used to perform these activities standing at a much stable price.
Upon inquiry regarding whether stablecoins would actually help improve the situation of trading, selling, buying etc. in the digital currency arena, Jason elaborated:
Yes. I could sell bitcoin (fractions of it) to stable coin and transfer that. 1 stable coin always (should) equal 1 stable coin. Whereas 1 bitcoin today will not equal necessarily equal 1 bitcoin tomorrow.
Stablecoins tackle the issue of volatility associated with the nascent world of cryptos and combine the stability of fiats, with the technological innovation of digital currencies. They are likely to increase the public adoption of cryptos as their stability increases the general trust of cryptos among the public.
Some might say stablecoins do not fulfill the true essence of cryptos as they are still linked to fiats, but their importance cannot be denied at all as they’ll surely help the market grow and mature in the long-run.