Stablecoins and why governments are terrified of them

Stablecoins are becoming some of the most intensely traded cryptocurrencies in the market right now. Most of the reasons can be associated with the extreme volatility that Bitcoin and other major altcoins have been facing. Because of this, most traders flee to stablecoins, hoping that they will simply wait the winter out and watch as the market corrects itself.

Although stablecoins were amazing tools to keep one’s investments safe for some time, they are starting to evolve into something much different. Many stablecoins companies are starting to promote their products as the money of the future, thus encroaching on very dangerous territory. The one occupied by the governments, central banks, mutual funds and of course, the treasuries. And that territory is something everybody should try to avoid.

However, stablecoins may be the only things that the government could be too afraid to face should they allow them to develop further. Thousands of outcries were first heard when a USD-backed cryptocurrency was released, and even more, meltdowns could be seen when Facebook announced its Libra project. Everything quickly became obvious, the governments are afraid of losing the monopoly of printing and controlling money, thus they are ready to block stablecoin initiatives that encroach on their territory too much.

What do stablecoins solve that fiats don’t?

Stablecoins weren’t necessarily introduced as something that would solve the issues fiats were facing. They were introduced to solve the issues that cryptocurrencies themselves were facing. Most of this had to do with the extreme volatility of the market.

Especially in 2018, most people had only two choices. Either leave their cryptos on cold or hot wallets and watch as they depreciate. Or try to withdraw as much as possible, hoping that it will come out alright in the end. Both of these options were extremely hard to choose, simply because both of them considered losing a significant amount of money.

With stablecoins, the market pretty much created a safe-haven for the traders and gave them the opportunity to wait out bearish markets. Unfortunately for fiat currencies, there is no such thing available for them. Thus, we have the increasing popularity of both crypto and regular traders.

Stablecoins in the trading world

Naturally, stablecoins aren’t good for trading simply because they do not gain any value no matter what happens in the market. However, they are still considered as some of the most popular ones even for AI trading platforms.

Software programs similar to Ricchezza Cripto have been re-developed especially for stablecoins when they first came into the market as well. It seemed like every blockchain company got immediately re-adjusted to the new reality. Now, AI crypto trading software is optimized to prioritize these stablecoins once there’s a serious bearish sentiment in the market.

According to many traders, these stablecoins have saved them on more than one occasion in the past.

But creating a safer environment for crypto traders is nothing to be terrified of for the governments now is it? So what are lawmakers afraid of most that stablecoins are capable of? Well, let’s find that out.

Stablecoins are actually reliable

Cryptocurrencies were never considered as something that the general population could use as money in the near future simply because of how volatile they are. One day a person may have millions of dollars in cryptos, and the other day they could have absolutely nothing.

Stablecoins are completely different in this case. They are reliable and don’t change their value aggressively. They also provide all of the other advantages of cryptos such as fast transactions, low costs, and anonymity. It was only a matter of time before these coins would become the go-to currency for eCommerce and other digital platforms.

And replacing something as profitable as fiat currencies is simply impossible for governments to deal with. Furthermore, they can’t guarantee the compliance of the company that makes these products.

Authoritative issues

Many governments were afraid that a single company would have way too much power over the currency market, thus influencing it for personal gain and hurt retail traders in the process. This kind of leverage is something that only the government should have and not use for the sake of the economy and the population.

But with private companies, there are almost no repercussions. The company can influence the market as much as it wants and in most cases will not have to conform to society’s demands. It’s a private company, meaning that citizens can’t influence who’s in charge and who isn’t. With governments, it’s a completely different story. Once they make a mistake like that, it’s almost immediately over for them in the next elections.

Therefore, although the stablecoin-scare is more or less justified for the governments it’s still something that needs to be handled very carefully.

Author: Yash Hirani

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