Why CoinCorner is not committing to stablecoins just yet

CoinCorner’s co-founder, Danny Scott, says: “The growth of stablecoins is a trend that is emerging within the crypto industry at the moment, with Coinbase being the latest to launch its own just this week. But what does it mean for the industry, and is it just a new phase in Bitcoin’s history, or something that will become viable long term?

“Companies creating and adding their own stablecoins all have different reasons for doing so: some see it as an alternative to banking (particularly whilst they look to develop their relationships with banks), whereas others see it as an opportunity to jump on the PR bandwagon.

“Stablecoins have the benefit of being able to send from exchange to exchange at a cheap and quick rate in the same method as other cryptocurrencies, so can be very useful for traders looking to arbitrage between exchanges. However, we are already beginning to see examples of how their centralization can cause issues, as with the recent case of Bitfinex burning 500m USDT (Tether). The centralisation of stablecoins means that there is a single authority in control, and as a result there is a central point of failure, which goes against the original purpose of Bitcoin.

“What’s more, despite carrying the name stablecoins, unfortunately they don’t always stay true to their value. This is because they are openly traded on exchanges based on the supply and demand, meaning their price can fluctuate if people are willing to pay less or more for the currency. For example, GUSD (Gemini dollar) was pegged at $1 and actually hit $1.18. Similarly, USDT (Tether) which is pegged at $1 has fluctuated over time and is currently trading at $0.96.

“So do we think stablecoins are here to stay? Only time will tell, but for now we are not committing to them.”