During the crypto-hype bubble and Bitcoin’s meteoric rise, speculation went wild due to the incredible potential that emerging technology could bring to the world – if only technology could find its “killer app,” something that would make technology one Must do for everyday life.
The killer app has not yet come, but now there are increasing indications that it could be stablecoins. And that could harm Bitcoin and other cryptocurrencies in the long run.
A crypto killer app could be created in this race
The recent history of the cryptocurrency industry has primarily been about Bitcoin and its unstoppable rise. The cryptocurrency took the world by storm at the end of 2017, when overnight it became a topic of conversation among private investors worldwide.
FOMO pushed the price of the crypto asset down to $ 20,000 – but the bubble eventually burst when Bitcoin’s network bottleneck surfaced, showing signs that the technology wasn’t ready for the over-the-top expectations speculators dreamed of.
This year, the bitcoin price rose again and went on a parabolic rally. It was only when Facebook launched its Libra stablecoin that Bitcoin’s rally ended and BTC was back in a downward trend.
Since then, Bitcoin has been demonized by government officials and regulators, and even U.S. President Donald Trump has spoken out against cryptocurrencies and Facebook’s Libra.
Stablecoin trading volume outshines Bitcoin
However, Libra’s development intensified the arms race among the stablecoins. Libra itself is designed as a stablecoin that is pegged to the dollar to offer stable pricing to the owners of the asset.
The notorious volatility of the cryptocurrency is due to the speculative nature of the asset class and the fact that the asset is not tied to other assets such as paper currencies, gold or real estate. Stabelcoins eliminate volatility but still retain the benefits and speed that Bitcoin and other cryptocurrencies offer.
Tether has been on the market for many years and today dominates bitcoin trading volume. This proves that stablecoins not only stay here, but can also be a more important factor in the crypto market than originally thought. Tether and other stablecoins have now become a way to store value, move capital, and are typically more reliable to use than Bitcoin itself due to price stability.
As Tether is notorious for its questionable business practices, the market leader for stablecoins faces additional competition from the Paxos standard, USDC and many others. Even world leaders recognize the disruptive nature of the stablecoin market, which could have a greater impact on the financial sector than bitcoin.
Unfortunately, the recent downtrend and Bitcoin’s problems may be due to investors slowly realizing that Bitcoin is not necessary to store values or move capital digitally. This is often better possible with stablecoins.