The Difference Between Cryptocurrencies and Stable Coins/National Treasuries Consider Issuing Stable Digital Currencies

Cryptocurrencies are subject to significant fluctuations in market value. Cryptos, such as Bitcoin, have suffered extremely large declines in value from time to time, although the long-term trend through recent years was a substantial climb in value.

Some “stablecoins,” in contrast, are theoretically backed by a reserve asset that acts as collateral, such as dollar-denominated bonds or currency accounts, and should therefore be relatively stable in value. The idea is that they should be able to be utilized in financial transactions and payments without concerns about swings in their value. Tether is an example of a stablecoin. However, investors and payees need to be aware that not all stablecoins are equal in nature, and some are actually backed, at least to some extent, by baskets of cryptocurrencies—which are not at all stable in value. It gets worse. Some stablecoins are actually just based on computer code (algorithmic) that is supposed to keep the system at a level value. Infamously, the TerraUSD stablecoin proved to be not stable at all when fell by 82% in one 24-hour period during May 2022. The somewhat related cryptotoken, Luna, fell from more than $60 to less than one cent over a very short period as well.

To date, cryptocurrencies have been largely untamed by governments, as legislation has not kept pace with the rapid growth of this sector. However, they are gathering large amounts of scrutiny by various government agencies worldwide, and significant levels of regulation and disclosure are likely to evolve. This will change quickly, as a result of so many crypto firms.

More government control of, and participation in, digital currencies is likely inevitable. Many government officials believe that cryptocurrencies may become a useful part of national banking systems. Others think they are completely unnecessary. In March 2022, President Biden, wanting to encourage the U.S. Government to stay on top of digital currency developments, including a study of needed regulations, signed an executive order aimed at “ensuring responsible development of digital assets.” At that time, the White House estimated that “over 100 countries are exploring or piloting Central bank Digital Currencies (CNDCs), a digital form of a country’s sovereign currency.”

In September 2021, the Central American nation of El Salvador made history by officially making Bitcoin legal tender within that nation. Citizens were encouraged to sign up for the government-created digital wallet (the “Chivo”) that enables anyone to use the cryptocurrency. Chivo users can make payments to each other, in Bitcoin. A small number of Bitcoin ATMs were established. Stated goals included decreasing dependency on the U.S. Dollar, helping the local economy to digitize and lowering remittance costs for funds that are transferred home to relatives in El Salvador by people who are working in the U.S. and elsewhere abroad. (However, many very successful FinTech startups are making such remittance payments faster, easier and much less expensive to transact online, without the need for Bitcoins. The outcome of El Salvador’s experiment remains to be seen. Meanwhile, other nations are running their own crypto programs, including the Sand Dollar in the Bahamas, the eNaira in Nigeria, DCash for use in a group of several cooperating nations in the Eastern Caribbean Union, and China, with its e-CNY or digital yuan. India, the European Central Bank, Jamaica and Sweden are likewise already active in, or seriously considering an experiment with, digital currencies.

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum.

Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum.

Become a Plunkett Research Online subscriber to gain unlimited access to our massive amount of vital industry data and market research.

✔ 100,000 Industry Statistics
✔ 500 Industries Analyzed for Market Size, Profits and Forecasts
✔ 150,000 Industry Executives Profiled
✔ 25,000 Companies Profiled, Ranked and Analyzed
✔ 1,000 Vital Trends Analyzed, totaling 1,000,000 words

Learn More

The Difference Between Cryptocurrencies and Stable Coins/National Treasuries Consider Issuing Stable Digital Currencies, Business and Industry Trends Analysis

A Representative List of Organizations that Have Used our Research and Products:

How to access Plunkett Research data.

What data challenge can we help you solve today?

Take a Tour

Contact

Testimonials