Stablecoin Could Become the Hottest Cryptocurrency Trend of 2019

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Stablecoin Could Become the Hottest Cryptocurrency Trend of 2019

Stablecoin Could Become the Hottest Cryptocurrency Trend of 2019Digital currency tokens that are pegged to the value of major fiat currencies enjoyed healthy trading volumes in 2018, by they could really take off this year. So-called “stablecoins” such as Tether and USD Coin made significant headlines last year, but questions remain about the future of these tokens. Interest by investors has been rising gradually, but active traders feel that stablecoins do not offer too much excitement, at least when compared to more valuable and volatile tokens such as Bitcoin and Ethereum. With all this in mind, here are some possible scenarios for the stablecoin market in 2019:

Transparency Will Be Key

The most visible stablecoin, Tether, is having a crisis of trust. This cryptocurrency, which trades under the symbol USDT, has been facing many questions related to its solvency and backing. As of mid-January, nearly 5 percent of all Bitcoin transactions involved the use of Tether, and this is despite serious doubts about the cash reserves of this digital currency project. USDT actually enjoys greater circulation than Bitcoin because it is easier to do retail consumer match when the value of USDT/USD will always equal $1, but skepticism surrounded this token for most of 2019.

One way Tether could assuage fears about its solvency would be to follow the example of Circle, the cryptocurrency trading division of Goldman Sachs, which operates a popular stablecoin known as USDC. Circle has only been around a couple of years, but it has already published three USDC audit reports, all of them showing that the outstanding tokens do not exceed the custodial account balances. These audits have been conducted by trustworthy names such as Grant Thornton, and investors have welcomed this level of transparency.

Circulation Will Be Crucial

Facebook’s first formal foray into the cryptocurrency market may involve a stablecoin. Rumors about Facebook developing its own WhatsApp coin for the purpose of competing in the lucrative world of international remittances have been bubbling up since 2018; however, the hearsay has recently expanded to include potential strategies. The blockchain portion appears to be in place, and Facebook’s test market will likely be India, a country that is very active in terms of remittances.

If stablecoins manage to achieve greater circulation than Bitcoin and other major cryptocurrencies, the entire market will benefit. To this effect, Ripple Labs has achieved more real-like circulation than all competitors thanks to the company’s tenacity in forging partnerships with major financial institutions. In the end, if any stablecoin catches up to XRP in terms of market capitalization during 2019, it would be through circulation.

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