• Press Releases
    • Submit a press release
    • Read All
  • Advertise
  • Contact us
Crypto.com Logo Crypto.com Logo
Bitcoinist.com
No Result
View All Result
  • Bitcoin
    • News
    • Price
    • Businesses
    • Acceptance
    • Technology
    • Investment
    • Regulation
    • Reviews
    • All Bitcoin News
  • Altcoins
    • News
    • Price
    • Ethereum
    • Ripple
    • Litecoin
    • EOS
    • NAGA
    • All Altcoin News
  • Tech
    • Blockchain
    • Security
    • FinTech
  • Industry
    • Industry News
    • Press Releases
  • Price
    • Bitcoin Price
    • Ethereum Price
    • Litecoin Price
    • Binance Coin Price
  • How to
    • Buy gift cards/mobile Top Ups with Cryptos
    • What Is Bitcoin?
    • Best Bitcoin Wallet
    • Bitcoin vs Ethereum
    • Why Use Blockchain Technology?
    • Bitcoin Cash ABC vs. Bitcoin Cash SV
    • How to Buy Cryptocurrency
    • Bitcoin Mining
    • Best Bitcoin Brokers
    • Best Bitcoin Forex Brokers
    • How To Earn Bitcoin
    • What is Facebook Libra?
    • Ripple and XRP: The Complete Guide
    • Bitcoin Casinos – Where, What and How to Play
  • Events
  • Play Games
  • Play Casino Games
  • Win 1 BTC
Breaking News: Breaking: DCG And Genesis Close Initial Agreement With Creditors
  • Bitcoin
    • News
    • Price
    • Businesses
    • Acceptance
    • Technology
    • Investment
    • Regulation
    • Reviews
    • All Bitcoin News
  • Altcoins
    • News
    • Price
    • Ethereum
    • Ripple
    • Litecoin
    • EOS
    • NAGA
    • All Altcoin News
  • Tech
    • Blockchain
    • Security
    • FinTech
  • Industry
    • Industry News
    • Press Releases
  • Price
    • Bitcoin Price
    • Ethereum Price
    • Litecoin Price
    • Binance Coin Price
  • How to
    • Buy gift cards/mobile Top Ups with Cryptos
    • What Is Bitcoin?
    • Best Bitcoin Wallet
    • Bitcoin vs Ethereum
    • Why Use Blockchain Technology?
    • Bitcoin Cash ABC vs. Bitcoin Cash SV
    • How to Buy Cryptocurrency
    • Bitcoin Mining
    • Best Bitcoin Brokers
    • Best Bitcoin Forex Brokers
    • How To Earn Bitcoin
    • What is Facebook Libra?
    • Ripple and XRP: The Complete Guide
    • Bitcoin Casinos – Where, What and How to Play
  • Events
  • Play Games
  • Play Casino Games
  • Win 1 BTC
Bitcoinist.com
No Result
View All Result
Breaking News: Breaking: DCG And Genesis Close Initial Agreement With Creditors
stablecoin stablecoins stable
Advertisement

Stablecoins Are The ‘Disney Dollars’ of Crypto

Allen Scott by Allen Scott
4 years ago
in Op-Ed, Altcoins, Bitcoin Education, Bitcoin Technology, Blockchain
0
Advertisement

Companies and exchanges are jumping on the stablecoin bandwagon — but just how promising is this concept and doesn’t it go completely against everything Bitcoin stands for? 


Dollar-Pegged Money is Nothing New

Disneyland’s first president, Jack Lindquist, introduced the in-house currency called Disney Dollars in 1987. These paper notes featured pictures of Mickey Mouse and other popular Disney characters. They were sold at the theme parks in denominations of $1, $5, $10, $20, and $50 — just like their USD counterparts.

Don't wait! Jump on this Crypto Deal and get a 150% Welcome Bonus plus 100 Free Spins on your deposit today!

“We set the criteria that our Disney money would always be tied to the price of the U.S. currency, so if a dollar is worth a dollar, a Disney Dollar would be worth a U.S. dollar,” Lindquist said in his memoir, In Service to the Mouse.

That way, the money could be spent in the parks, the same way U.S. currency is.

Today, in the cryptocurrency space, this would be called ‘tokenization’ of a fiat currency and the product a ‘stablecoin’ — such as USDT, USDC, Pax, HUSD, etc.

BitStarz Player Lands $2,459,124 Record Win! Could you be next big winner?
570% up to 12 BTC + 300 Free Spins for new players & 1 BTC in bonuses every day, only at Wild.io. Play Now!

However, despite being “produced with the same level of security, care, and concern as any other currency,” Disney discontinued it in 2016 as gift cards and other forms of payment rendered them obsolete.

In other words, stablecoins, or to be precise, stablecoins controlled by a central entity (e.g. Disney, Coinbase etc.) are nothing new. They exist in many forms today all over the globe with nations even ‘pegging’ their money to the global reserve fiat currency, the US dollar, to achieve the same goal: stability.

Places like Hong Kong and Bahrain, for example, are some of the biggest economies in the world whose currency is pegged to the USD.

They’re Not Stable and They’re Not Coins

Stability becomes a relative concept, however, when the bigger picture of the dollar-dominated global financial system comes into view.

By design, like most fiat currencies today, the dollar itself is a depreciating asset. Thus, a currency pegged to the (uncapped) USD will lose value over time as well.

A stablecoin is no different. It retains all the centralized properties of fiat while introducing none of the benefits of Bitcoin technology such as neutrality and censorship resistance contrary to stablecoins being often marketed as the new gateway to “an open financial system.”

In fact, regulated stablecoins, in particular, can be easily frozen, blacklisted, and confiscated by the issuer company.

All centralized stablecoins will likely need to incorporate this or will be shut down when they fail to obey judge’s orders to freeze criminal accounts. https://t.co/hgshqLkgv1

— Ari Paul (@AriDavidPaul) October 24, 2018

Banking support for stablecoin issuers has also proven to be unreliable at times.Tether, for example, remained tight-lipped about its banking partner details recently when it announced it will re-open fiat deposits from KYC-verified users.

So yes, they may be useful in providing relative short-term stability and help traders with arbitrage opportunities — but the tradeoffs are the loss of privacy, centralization and a guarantee that value will depreciate over time, as with all fiat currencies, even if the spot price stays at $1. However, this is not always the case.

“…Despite carrying the name stablecoins, unfortunately, they don’t always stay true to their value,” explains CoinCorner co-founder, Danny Scott.

This is because they are openly traded on exchanges based on the supply and demand, meaning their price can fluctuate if people are willing to pay less or more for the currency. For example, GUSD (Gemini dollar) was pegged at $1 and actually hit $1.18. Similarly, USDT (Tether) which is pegged at $1 has fluctuated over time and is currently trading at $0.96. So do we think stablecoins are here to stay? Only time will tell, but for now we are not committing to them.

Therefore, while they could maintain the peg and appear relatively ‘stable’ compared to free-floating cryptocurrencies like Bitcoin [coin_price] terms such as ‘fiatcoins’ or ‘pegcoins’ would probably be fitting to describe these digital assets.

People need to stop calling fiatcoins stablecoins.

— Mathias Grønnebæk (@MatGroennebaek) October 23, 2018

‘PayPal on the Blockchain’

As new regulated stablecoins are launched almost daily, the next ‘blockchain not Bitcoin’ hype cycle may be here. In fact, at least 45 startups are vying to one-up Tether [coin_price coin=tether] through regulatory compliance, greater transparency, etc. — while some are even launching a ‘stablecoin for stablecoins.’

“Companies creating and adding their own stablecoins all have different reasons for doing so: some see it as an alternative to banking (particularly whilst they look to develop their relationships with banks), whereas others see it as an opportunity to jump on the PR bandwagon,” says Scott.

However, he warns that since ‘pegcoins’ are issued and effectively controlled by a single entity, this makes them not only antithetical to Bitcoin, but re-introduces the problem it solved: having to trust a middleman.

“We are already beginning to see examples of how their centralization can cause issues, as with the recent case of Bitfinex burning 500m USDT (Tether),” Scott adds.

The centralizationn of stablecoins means that there is a single authority in control, and as a result, there is a central point of failure, which goes against the original purpose of Bitcoin.

Regulated stablecoins, putting PayPal on a blockchain since 2018. ?

— elizabeth stark (@starkness) October 24, 2018

Are stablecoins just hype or will they find their niche in the cryptocurrency space? Share your thoughts below! 


Images courtesy of Shutterstock, Twitter

ShareTweetShareShare

Sign Up for Our Newsletter!

For updates and exclusive offers enter your email.

I consent to my submitted data being collected and stored.

Allen Scott

Allen Scott

Allen is the editor-in-chief at Bitcoinist.com. He has a background in journalism and economics and had his Bitcoin "Aha!" moment in 2013. He has interviewed some of the most prominent experts, entrepreneurs and thought-leaders within the cryptocurrency space. Send your leads, tips or interview requests to: [email protected]

Related Posts

AI tokens institutional investors

AI Tokens Lead Crypto Market Gains As Institutional Investors Bet Big On The Technology

19 hours ago
cbdc

Bank Of England, UK Treasury Support ‘Digital Pound’ Project, Say UK Likely To Need CBDC

2 days ago
Groundhog Day bitcoin altcoins crypto winter

Groundhog Day: Will We Get Six More Weeks Of Crypto Winter?

5 days ago
Polkadot DOT DOTUSDT

Automotive Giant Toyota Explores Polkadot Project To Increase Business Efficiency

6 days ago
Floki Inu

Community Votes To Burn 4.97 Trillion Tokens Of Shiba Inu Rival, Floki Inu

1 week ago
Blockchain

Blockchain For Traceability: Thailand’s Biggest Food Exporter Uses Tech To Monitor Goods

1 week ago
Please login to join discussion

Premium Partners

Premium Casino Partners

Top Casinos

BitStarz
BitStarz
Punt Casino
Punt Casino
mBit
mBit
Metaspins
Metaspins
1xBit
1xBit
Coinplay
Coinplay
K8
K8
Vegas Casino
Vegas Casino

Sportbooks

Coinplay
Coinplay

Press Releases

  • The 7 Best Altcoins to Buy Now to 10X Your Money

    22 mins ago
  • These 7 Best Cryptocurrencies to Buy During Presale

    51 mins ago
  • Which Is The Best Crypto Meme Coin To Invest In 2023...

    2 hours ago
  • Cardano On The Climb, Whilst Big Eyes Coin Extends 200%...

    2 hours ago
  • Big Eyes Coin can boast the biggest pre-sale in recent...

    2 hours ago

Bitcoin news portal providing breaking news, guides, price analysis about decentralized digital money & blockchain technology.

Bitcoin

  • News
  • Price
  • Businesses
  • Acceptance
  • Technology
  • Investment
  • Regulation
  • Reviews

Altcoins

  • News
  • Price
  • Ethereum
  • Ripple
  • Litecoin
  • EOS
  • NAGA

Categories

  • Blockchain
  • Security
  • FinTech
  • Technology
  • Trending
  • Breaking News
  • Press Releases
  • How to

Pages

  • Contact us
  • Editorial Policy
  • Advertise
  • Crypto Prices from Nomics
© 2023 Bitcoinist.com. All Rights Reserved.
  • Bitcoin
    • News
    • Price
    • Businesses
    • Acceptance
    • Technology
    • Investment
    • Regulation
    • Reviews
    • All Bitcoin News
  • Altcoins
    • News
    • Price
    • Ethereum
    • Ripple
    • Litecoin
    • EOS
    • NAGA
    • All Altcoin News
  • Tech
    • Blockchain
    • Security
    • FinTech
  • Industry
    • Industry News
    • Press Releases
  • Price
    • Bitcoin Price
    • Ethereum Price
    • Litecoin Price
    • Binance Coin Price
  • How to
    • Buy gift cards/mobile Top Ups with Cryptos
    • What Is Bitcoin?
    • Best Bitcoin Wallet
    • Bitcoin vs Ethereum
    • Why Use Blockchain Technology?
    • Bitcoin Cash ABC vs. Bitcoin Cash SV
    • How to Buy Cryptocurrency
    • Bitcoin Mining
    • Best Bitcoin Brokers
    • Best Bitcoin Forex Brokers
    • How To Earn Bitcoin
    • What is Facebook Libra?
    • Ripple and XRP: The Complete Guide
    • Bitcoin Casinos – Where, What and How to Play
  • Events
  • Play Games
  • Play Casino Games
  • Win 1 BTC

© 2022 Bitcoinist. All Rights Reserved.

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy Center or Cookie Policy.