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What Are Stablecoins?

In The Tokenizer and in blockchain media in general, the concept of ‘stablecoins’ is frequently used, but what is a stablecoin really? CB Insights has recently published a report dedicated to the topic.

CB Inisights data clearly documents the emergence and rising interest in the concept of stablecoins – practically nonexistent until 2018 and then with a steep rise in interest and news coverage. The Tokenizer will surely contribute to even further news coverage in 2019.

The report covers the main driving force of stablecoins, the seemingly eternal challenge of cryptocurrencies – volatility. The volatility in cryptocurrencies has created millionaires and reduced fortunes overnight and first and foremost, the volatility has limited many of the most promising use cases for cryptocurrencies.

CB Insights categorises stablecoins into four categories – Fiat-Collateralized, Commodity-Collateralized, Crypto-Collateralized and Non-Collateralized.

The report looks into the pros and cons of each type and shares examples of the different types from MakerDAO’s ‘DAI’ to the somewhat controversial Tether and the more exotic Mongolian stablecoin ‘Candy’  which is backed by the Mongolian currency tugrik.

The report dedicates a chapter to the description of different real-world use-cases where stablecoins has the potential to improve or even disrupt existing processes and services.

In conclusion, CB Insight looks at the current limitations of the stablecoins in the market, but remain positive about the future outlook of stablecoins

“Cryptocurrencies are still in their infancy, and this is even more true with stablecoins. This new form of digital currency is still taking form and has a long way to go before potentially reaching maturity.”
CB Insights

The full report is available for free and can be downloaded on CB Insights website here: https://www.cbinsights.com/research/report/what-are-stablecoins/

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