We like the way this article describes the rising number of stablecoins entering cryptocurrency — a “Cambrian Explosion.”
It’s a good analogy because we’ve gone from just a handful of these coins in the last 18 months to around 60.
Even by the most generous standards in looking at the need for these coins, a few seems plenty to accomplish all the potential good stablecoins promise. That good is largely based on their use as a key bridge for many investors who want to enter the market without taking a position on any particular cryptocurrency.
Stablecoins are pegged to other stable assets. They are global and unfettered by a central bank, yet they have low volatility, making them ideal for use in everyday life.
When we think about the currencies that could be used to back stablecoins, there are only a few that are critical out the gate. We need a dollar-pegged one, a euro-pegged one, and a gold-pegged one. Those are the base layer.
Obviously, we have many more than will survive and thrive in the future, just as there were orders of magnitude more dotcoms in the 1990s than are extant today.
The stablecoin with a clear lead is the Gemini Dollar created by the Winklevoss twins and backed 1 to 1 by the U.S. dollar. But Circle has launched its own version.
In general, we’re excited about stablecoins because they are yet another lowering of an obstacle for those who are new to the market. And we’re all for those kinds of things, assuming they don’t negatively affect the attributes that make crypto set crypto apart.