Bitcoin Vs Stablecoin: Which Principles Will Govern the Future?

Cryptocurrency has been around for a while now, with Bitcoin having just capped a decade in existence. The very purpose behind its invention, was so that the world could experience a decentralised currency that was kept out of the hands of politicians and isolated from corruption and manipulation.

It seems that the blockchain boom has not gone unnoticed though, with some top tech companies, financial houses, and even some individual countries moving to take advantage of the ledger system by establishing their own cryptocurrencies. This interest has sparked rumours of Stablecoin increasing its stake in the market, much to the outrage of Bitcoin and cryptocurrency purists. Facebook, JP Morgan Bank, and the Government of Venezuela are setting to add ripples in the crypto-industry with this hybrid coinage.

STABLECOIN BASICS

Stablecoin is a form of centralised cryptocurrency that is tied to the value of the dollar or some other form of commodity or fixed asset. This is said to stabilise the currency more, meaning that it will become far easier to bank on the value of the coin at investment level. The volatility of cryptocurrency is one of the very reasons why more and more giant magnates have not adopted e-currency into their business practices, as of yet.

Because the process of establishment differs from the mining of Bitcoin, Stablecoin tends to be more of a tokenised money system than a true cryptographically mined currency. Sure, popularity may dictate its success in the long run, but it alone will not be the only factor in determining the clout of the currency. Other than the fact that it is digital and built on blockchain technology Stablecoin actually has very little in common with true crypto currencies like Bitcoin. It has lost the soul of self-regulation and anonymity that Satoshi Nakamoto envisioned for the future.

TRUSTLESS PLATFORM VS 3RD PARTY HOSTS

It would seem that the three parties associated with Stablecoin are looking to redefine the definition of blockchain transactions by compromising one of the founding values of the Bitcoin system – That is that the true blockchain is a ‘trustless’ system.

Satoshi’s trustless concepts refer to the fact that any two parties could transact directly with each other without the need of a ‘trusted’ middle man. The trust would lie rather in the immutability of the blockchain, itself. The middle man, in their opinion was open to add costs to any process, as well as have it within their power to tamper with and manipulate the transactional business.

Intermediary companies (investors) are what add value to money in a fiat economy, whereas Bitcoin completely bypasses this need by establishing value on the work it takes to mine the currency and its popularity by the general public.

Stablecoin, by definition, is controlled by the company or party releasing the tokens. They would act as regulators, which of course automatically gives them oversighted powers. Bitcoin bases its payment system on cryptographic proofs rather than needing trusted third parties.

CENTRALIZED VS DECENTRLISED LEDGERS

One of the central principles of cryptocurrency, is the decentralization of the Blockchain. Having it spread over a number of servers on the internet ensures that no one is able to tamper with a ledger. For one to be ‘fixed’ by a company, it would require that all the ledgers be ‘fixed’ as well. For this reason, the blockchain is immutable. Changing any transaction that has been carried through to the end is virtually impossible.

Centralisation gives far more power to the company holding the server upon which their form of blockchain operates. Isolating currency like this, means that if they need to, they can make certain alterations to transactions by shutting the server down for even a few minutes.

The decentralisation of Bitcoin and other cryptocurrencies has led to a fine list of advantages in the marketplace, including things like:

  • Identity Security
  • Low cost transactions
  • No taxes on foreign exchange

While these things are awesome and work so well in a number of industries, the problem of sufficient regulation of such business has been a challenge that governments and lawmakers have been trying to resolve for some time now. Perhaps Stablecoin holds the very key to balancing the entire equation for us.

THE EFFECT OF STABLECOIN ON BLOCKCHAIN

The longer we look at the subject of Stablecoin, the more time we will have to conjure up conjecture for and against the currency. Without a completed working example in the mainstream, there is no real reference to draw our arguments from.

We do however believe that whichever way this coinage goes, it will definitely leave a lasting impression on the blockchain, in the following ways:

  • Awareness: The introduction of Stablecoin at this level, by such strong company bases, will most definitely have more people interested in the subject of the cryptocurrency. This will afford the market a chance of educating the masses on the finer details of Bitcoin. Though crypto friendly supporters see Stablecoin as the enemy, their advancements could actually end up growing the decentralised side of the coin as well. As people learn about Stablecoin, they will be exposing themselves to the facts around pure cryptocurrency too. This means that while some may sign up for a more controlled environment, others will flock to the decentralised coins as they discover the benefits there. So, stock up on your Bitcoin and ride the tide that all of this PR is going to present to the crypto-market.
  • Blockchain Validity: When big companies start underpinning the principles of blockchain, its credibility can only climb. Many naysayers in the upper echelons of economics and business have rubbished the name of blockchain and turned many away from the potential offered there. Recent Bitcoin adoption by the NASDAQ, Facebook and JP Morgan can only help bolster the industry and help win the trust of millions of investors in the future.

BRIGHT FUTURE FOR THE CONCEPT

It has always been touted by cryptocurrency enthusiasts, that blockchain would be the way of the future. Analysing the current climate in the tech sphere, would seem to support this assumption. Perhaps the only question that might arise now, is: Will blockchain be used to bolster a centralised system, or will it continue to grow the trustless transaction methodology implanted at its inception, just over a decade ago?