Fixed-Price Crypto Assets Face 5 Major Challenges
For the first time, Coinbase is now standing behind a stablecoin: the US backed dollar (USDC) that was coined by Circle. The stablecoin, as its name gives away, is stable and unruffled by any fluctuations in its related currency and compared to BTC and ETH. It’s an entirely different kind of cryptocurrency.
In the Aesopic race of the tortoise and the hare, the stablecoin market is growing; with the most notable ones being GUSD and TUSD turtle-stepping into a bigger environment.
With stablecoins, the two sides of the same coin are different; their upsides range from faster linking with dApps to local storage but the downsides need further investigation and more in depth data sets in order to track them.
Stablecoins’ Main Challenges
Devolving of cryptocurrencies
It took some time to build the crypto space on solid ground and to develop its unique value. It was partially unique because all the leading forms of money i.e. reserve currencies weren’t involved, it was finally establishing its own signature on the economy, but now with the main currencies are back in the games, whether it be the Dollar or Euro, it creates a dollar-focused thinking instead of focusing on the essence of all this which is; crypto, and is a sure downward spiral towards market inflation. The unique value mixed with the mainstream produces more confusion than growth.
No matter how different, all stablecoins come from the same place by the same issuer and he can always make more; their source is infinite and in the statistical scheme of things, they will win given their undying source of creation compared to other cryptocurrencies that come in definite numbers with a decided fate which gives stablecoins the upper hand in controlling and manipulating the total crypto market value.
Stablecoins are merely a compensation for Central Bank’s reluctance to issue Fiat money in the crypto space.
Specific coins like Paxos have certain codes and techniques to seize user’s coins, paralyzing their account and turning its information over to legal entities. However, BTC cannot be obtained nor controlled except through dark methods. On the other hand, USDC may have the authority to control each user’s information which is a personal privacy stab in the back to every user risking the potential threat of freezing any account any time based on minor suspicions which are ever-present to begin with.
The Dollar Attack
The only shield some coins have is their algorithm which might expose them to a forex-like currency attack while trading. The dollar rate could be seen as a potential gain to some, given how some of the stablecoins are susceptible, as mentioned by Forex specialists.
A short trip down memory lane reminds us of the sudden crash and burn of USDT, which importantly triggers another alarm bell, that other crashes will be orchestrated for acquiring gains.
All coin purchases are inspected regardless of the amount invested and when it comes to stablecoins, there’s much more freedom to produce new quantities which may turn away huge and elite dealings given the free-trading limits industry because as legal as tokens are, there are still dark alleys where chicanery can happen.
Like USDT’s bots that have been observed performing BTC deals to hike up the prices.
Stablecoins are manufacturing cynics who believe this is a type of systemized pressure to return crypto back to square one asking for bank permits and putting it under the banking institutions' sphere of influence. Stablecoins should be beneficial for when the waves are crashing on the market and people are looking for life jackets, but in essence, the very nature of the crypto market rejects the entire concept.