Stablecoins in the cryptocurrency sphere have had a polarizing effect on the community since their emergence. Existing on Ethereum and other blockchains, many feel stablecoins are not true cryptocurrencies and are being stymied with pegs to existing fiat currencies, but there is a growing feeling that they are the pathway to mass adoption.
In fact, this feeling is more than a growing sentiment. The Ethereum blockchain, which is the home of some significant stablecoins, has seen its native ETH cryptocurrency flipped in relation to the cumulative transfer volume of those stablecoins. In other words, Ethereum’s economy is now dominated by stable value transfer.
1/ Stablecoin transfer value has now flipped ETH on Ethereum 👀 pic.twitter.com/wwlNF2ObOV
— Ryan Watkins (@RyanWatkins_) January 29, 2020
The implications of this are rather significant as it is not only an impressive feat but proof that the demand for stable value is high. And, as the CEO of Binance Changpeng Zhao believes, it is the path to greater cryptocurrency adoption.
Crossing the Chasm
In terms of adoption, the meteoric rise of Bitcoin into the mainstream came off the back of its impressive gains through 2017. However, when that rocketship came back down to earth, adoption plateaued, if not fell back. In the ensuing years, the industry has been looking towards the next step for adoption.
Zhao, in reaction to the stablecoin transfer value flip on Ethereum, outlines the polarizing sentiment around stablecoins. Cryptocurrency early adopters, like Zhao, see stablecoins as being against the main pillars which uphold the values of the industry. However, for new adopters, their stable value removes the volatility, which has been a barrier to entry for newcomers.
Many of us (early adopters) don’t like stable coins, but fact is, that’s what’s needed to help us cross the chasm, as most new crypto people will still think in fiat base for a while to come.
I wish that’s not the case, but we live on earth, not utopia. https://t.co/oBjc32vOyk
— CZ Binance (@cz_binance) January 30, 2020
What is probably more concerning for those wary of stablecoins is that the primary mover of the ETH flip is Tether’s controversial USDT stablecoin. This asset has, for the most part, out-performed even Bitcoin in terms of trading volume, and is a significant factor in the success of the cryptocurrency space.
Stablecoins and the Path to Adoption
Zhao’s assertion that, against his own inclinations, this is a good move, is indicative of the advancement and acceptance of new technology. As the blockchain and cryptocurrency space evolves, it is clear that bigger institutions and even governments are impressed with certain aspects, but are skeptical of others.
One such aspect is volatility. For non-cryptocurrency users, stable fiat is the only norm, and for this generation to move towards something new, there needs to be familiarity. Cryptocurrency offers a new and better option, but having it be fiat-like is far more welcoming.
That's usually how new tech and ideas are adopted. The present generation needs one foot on the old and one on the new at the same time to feel safe and be familiarized in their new surroundings. It happened to cars, online shopping and democracy.
— Jay – Coincollector (@JsCoincollector) January 30, 2020