Stablecoins are arguably the fastest-growing type of cryptocurrency today. In 2020 alone, the supply of stablecoins has jumped from $5 billion to $23 billion.
Without this much needed degree of price stability, cryptocurrencies would be hard-pressed to offer more complex financial instruments, such as loans, derivative contracts, or insurance – and thus to become part of our global economy.
All of this is possible today, and an entirely new industry based on cryptocurrencies – DeFi, or Decentralised Finance – is quickly gaining momentum partly enabled by stablecoins.
However, there are still many challenges before a future where cryptocurrencies are mainstream materialises – the most important of which being regulation. The borderless, censorship-resistant nature of cryptocurrencies is frequently at odds with the existing financial framework, and some backlash is to be expected.
That said, whatever the outcome of the clash between technological advances and regulatory efforts, Stablecoins are poised to play a lead role for the foreseeable future.
Leave a Reply