The upsides and downsides of adopting stablecoins

Stablecoins have recently gained a lot of attention from global regulators. They are a new form of cryptocurrency that are pegged to an asset.

The most widely used is Tether, which supposedly is valued one to one with the US dollar, and in August the eZAR token was launched with promises that every eZAR issued is backed by a rand held in trust. Recently, Facebook announced plans to launch a stablecoin called Libra. These developments may over time cause the demise of existing cryptocurrencies and also warrant serious attention by the regulatory authorities and consumers alike.

With stablecoins providing greater price certainty, their use in commercial transactions is likely to increase quite rapidly. This makes sense because if one can buy a token that represents a currency, and it can be used to purchase goods or transfer money locally or abroad, all at a cost lower than those charged by commercial banks, there is a clear argument to start using stablecoins.

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