Circle’s Gordon pitches the idea of stablecoins

Stablecoins are a type of digital tokens that are pegged to a fiat currency, USD, for instance, and their valuation is determined accordingly. They are comparatively safe for usage within the ecosystem. However, stablecoins have always been looked at as casino chips. Meaning something that has limited utility for only a handful of people.

Gordon Liao, the Chief Economist at Circle, has now pitched an idea that stablecoins are much more than that. People cannot simply choose to limit their perception when it comes to stablecoins. His comparison comes to enlighten that stablecoins are even closely related to the fundamentals of RTGS, short for real-time gross settlement systems.

Stablecoins and RTGS are related, except for the fact that stablecoins come with a lot of improvement. Stablecoins carry traceability and wide accessibility. They ensure financial inclusion by accelerating the adoption of their network to areas where traditional banking systems may be unable to deliver the offerings. Hence, becoming a crucial part of the existing financial infrastructure.

Another improvement is programmability which makes tokenized money an important contender in the financial ecosystem.

RTGS is here to stay. Assuming stablecoins make it to the edge of clarity among non-users, there is no doubt that the door to a large number of advantages will open up. This includes a strong deterrence against illegal financials, better settlements across borders, and better liquidity management.

Stablecoins cannot be restricted to their utilities in speculated activities. They were first able to back the everyday crypto trading volume worth $5. Five years down the line, the valuation has declined by more than 90%, with no correlation to the crypto market whatsoever. The decline has indeed come in a series throughout its run in the last 5 years. It peaked in 2019 and has not been able to get back on track since then.

Also, the relation between the growth of stablecoin payments and return on crypto assets is pretty weak.

The declining trend goes on to make it rather more evident that the general viewpoint of non-users is limited to stablecoin. The only angle of its utility in trading has to be expanded. Stablecoins have the potential to enhance payment settlement across borders, facilitate financial inclusion to better the infrastructure, and trace the origin to mitigate the risk of illicit financial activities.

The relation with the fiat currency, USD, in this instance, is unbreakable. This makes them a better player against other digital assets. The risk of volatility is diluted with the correlation to traditional financial mechanisms and thereby providing monetary security to those who are often concerned about losing their worth to the market.

However, to circle a bit more around the image of crypto poker chips, the network is assumed to have the tag of the crypto casino, where players wager their chips and let faith or luck take care of what it yields.

A community-based discussion is awaited. Surety is that Gordon has a lot to back his statements in the paper that is available on the internet.

Scott Cook

Scott Cook got into crypto world since 2010. He has worked as a news writer for three years in some of the foremost publications. He recently joined our team as a crypto news writer. He regularly contributes latest happenings of crypto industry. In addition to that, he is very good at technical analysis.

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