Stable Coins without Actual Liquid Cash Back up are ProblematicOctober 5, 2019
Apple, Facebook, Samsung, and Twitter are giants who are showing interest in cryptocurrencies. The price of the Bitcoin went up by 200% during the first half of the year. It seems like private companies are looking to gain power by issuing their own versions in cryptocurrency.
Samsung recently built a key store, which permits users to store their private keys into their Bitcoin and Crypto wallets.
Jack Dorsey, CEO of Twitter, recently hired Bitcoin and cryptocurrency experts. Several technology companies are doing things to incorporate Bitcoin and cryptocurrencies in many ways.
While Tim Cook and governments across the world opine that private companies should not gather power in their hands with their own money, companies and corporates are interested in the process for their advantage.
Apart from Bitcoin, some Altcoins have large cap, medium cap, and small-cap in terms of value. However, not all of them are viewed as assets or securities. They are considered to be payment instruments. Most of these services to lower transaction costs when the value is exchanged between individuals, parties, and consumers.
Alternative coins which do not have actual liquid cash back up are problematic. Therefore, inventory is a major obstacle for most of the stable coins and Altcoins. If someone should use Facebook’s Libra as a cross-border payment instrument, they need to have the respective currency baskets to back the stable coins. They need to have the respective currency value sitting around with them. This can become a big problem if they do not have the sufficient backing. When in the technological progression, banks begin adopting this transaction process, they cannot say that they need to wait to execute a transaction until they get the cash.
People might not feel transacting with companies who have limitations on transaction sizes, and they might not enjoy banks turning down transactions as they are not able to liquidate cash equivalent.
Institutional investors would not want to spare markets that have volumes. Volumes are indicative of people’s interest in the asset type, and this, in turn, contributes in a great deal to price stability and decline in volatility.
A tokenized economy, therefore, improves the trustworthiness, transparency, and accountability in the market. Services like Bakkt support the management of cryptocurrencies, and the growing corporate interest in the cryptocurrency space indicates the value involved in the process of investing in digital assets.
The financial ecosystem is expanding with diversity in the crypto portfolio for their traders and investors, therefore, improving the involvement of the global market in the crypto trading process.