Once up a time there was crypto and fiat. If you wanted to trade in altcoins you had to first buy Bitcoin. Tether changed all that when it came onto the scene on Bitfinex in 2015, today there are a slew of stablecoins all competing for supremacy.USDC Listed on BinanceThe controversy surrounding Tether coupled with its recent volatility has led to the birth of several similar dollar pegged stablecoins. Once has been created by Coinbase and partners at Circle, USD Coin. On Thursday USDC was granted a new realm of legitimacy when Binance, the world’s top crypto exchange by trade volume, announced that it would be listing new pairs.According to the announcement Binance will be offering two new USDC pairs for Bitcoin and its own Binance Coin (BNB) as of November 17. To quash the auditing concerns that plagued Tether, the exchange added;“Additionally, for increased transparency, USDC has engaged a top-ranking auditing firm to release monthly balance attestations of the corresponding USDC and USD balances held/issued.”USD Coin is only a few months old but it is growing in power as an alternative to USDT. It still has a way to go though, with daily volume, according to Coinmarketcap, at $16 million, compared to $4.7 billion in Tether trade. However, with USDC available on Coinbase and now Binance, its usage is expected to grow rapidly especially when more trading pairs are introduced.According to the company blog “Circle and Coinbase co-founded the CENTRE Consortium with the goal of establishing a standard for fiat on the internet and providing a governance framework and network for the global, mainstream adoption of fiat stablecoins.”If complete transparency and audits are forthcoming it may not be long before USDC surpasses USDT however the centralization issue raises its head again when one company is holding all of the cards. This is especially true if Tether continues to show volatility and inability to maintain its dollar peg.Tether in TurmoilDuring the recent crypto rout Tether fell to $0.964 whereas USDC actually hit a peak of $1.06. The Gemini Exchange’s GUSD spiked at $1.18 according to CMC. At the time of writing USDC is still trading over a dollar and USDT is under it. Fortune has noted that if Tether collapses “it could deliver a shock to the crypto markets that makes this week’s wipeout look like a hiccup.”The good news is that there are now several alternatives to Tether in addition to USD Coin, such as TrueUSD (TUSD), Gemini’s own GUSD, Maker DAO’s Dai, and the Paxos Standard Dollar (PAX). So traders are no longer tethered to Tether, go ahead and take your pick, some are even offering more than buck right now. Image from Shutterstock
The co-founder of a Melbourne-based Bitcoin exchange has said that stablecoins are the “craze right now,” with money and expertise moving toward it.
Rising Interest in Stablecoins
Asher Tan is one of the founders of CoinJar, a Bitcoin exchange based in Melbourne.
Speaking in an interview with the Financial Review, he talked about the rise of stablecoins.
The interesting thing right now, what’s on everyone’s lips, is what you call a stablecoin. A stablecoin is a coin pegged to a currency, usually the U.S. dollar. It’s a craze right now. […] It helps you transfer money around the crypto ecosystem at a stable rate. But there’s a whole lot of applications or use-cases that could come out of it.
He went on to state that even though the concept of stablecoins has been around for some time, it’s only now money and expertise are flocking to it.
In London I see a lot of finance people getting into it. People with 10, 20 years of forex experience are trying their hand at it. […] It’s drawing a lot of people from traditional financial circles, just because it’s interesting, it’s intriguing, there’s a lot of upside to it.
The most popular stablecoin is Tether, which is supposed to be backed by the U.S. dollar, with one Tether valued at $1. However, Tether has come under increasing criticism, with many questioning it. At the time of publishing, the price of Tether $0.98, according to CoinMarketCap.
Yet, while Tether is the first one to gain interest, others have since joined the market.
In September, it was reported that the Winklevoss twins had received New York state approval to launch the Gemini Dollar, a U.S.-backed dollar cryptocurrency.
IBM is also considering joining the race. The multinational technology company is looking into a cryptocurrency that’s tied to the U.S. dollar, which would rely on a platform created by Stellar.
Paxos, the company behind the itBit crypto exchange, also received permission from the New York Department of Financial Services (NYDFS) for their U.S. dollar-backed Paxos Standard cryptocurrency.
Goldman Sachs-backed Circle has also released its own stablecoin. The USD Coin is backed by the U.S. dollar as well.
These are just a few examples of stablecoins. However, they show the increasing interest the market is showing it, proving, as Tan says, that they are the craze right now.
What do you think of stablecoins? Are they the latest craze or are they here to stay? Let us know in the comments below.
Images courtesy of Shutterstock
In case you missed it, Poloniex, one of the major altcoin exchanges, was acquired by Circle in February. Previously, Circle was focused primarily on the major coins versus fiat pairings, but since its acquisition of Poloniex it has had the opportunity to dive into more tokens, and in September it launched its own stablecoin to compete with tether (USDT) and the Gemini Dollar (GUSD), which was launched around the same time. The purpose of “stablecoins” is to help traders denominate their cryptos without creating a crypto-to-fiat event as well as to have coins that are pegged with some degree of certainty to the US dollar.
USD Coin has already been listed for use at Coinbase, one of the largest bitcoin exchanges in the world (owing to the fact that Coinbase is also a founding member of the token’s development consortium), and of course, they immediately put it to work on their new property, Poloniex. Now people wanting to get hold of and trade USD Coin on Poloniex have more incentive to do so, as Circle has decided to stimulate usage by eliminating trading fees for the coin on the Poloniex platform, at least through the end of November.
As CCN reported, Poloniex users are already trading two versions of bitcoin cash for USD Coin. Somewhat ironically, they are also offering to exchange USDC against USDT.
For the present, this means that Poloniex users have two stablecoin options. It is unclear whether Poloniex will list USDT indefinitely, but it has been on the exchange almost since its inception as Poloniex transformed from a major altcoin exchange to a major everything exchange.
At the time of writing, a minor arbitrage opportunity existed between USDC, wherein one could purchase a USDC for $1.00 and buy around $1.01 worth of USDT. Tether is supposed to be exchangeable directly for $1.00 via Bitfinex, so the divergent trading, done in mass quantities, is an opportunity for savvy traders with deep pockets to profit.
According to Circle, over $130 million in USDC are now in circulation, and this number should expand as usage of the token increases. Trading volume, though, has yet to match its market cap, as daily turnover is just $3.4 million.
Featured Image from Shutterstock