Stablecoins and Lending: Is Crypto Going Mainstream?

Bitcoin’s launch in 2009 marked the rise of cryptocurrencies. At the time, the utility of cryptocurrencies was limited. They were seen primarily as an investment vehicle and/or a political expression.

As Bitcoin’s value rose, people became increasingly interested in developing related services like e-commerce payments in cryptocurrencies, ATMs, and banking services.

In this article, we will take a closer look at the signs that cryptocurrencies are starting to be seen as legitimate peers to government-issued fiat currencies.

More specifically, we will take a look at the rise of stablecoins and innovations in digital banking, as well as what these mean for the widespread adoption of cryptocurrency.

Stablecoins

One of the downsides of cryptocurrencies, especially when compared to fiat currencies, is its volatility.

Experienced day traders value volatility. The greater the volatility, the more they can potentially profit from short-term trades. But volatility is a downside for those who are seeking to use cryptocurrencies in lieu of traditional currencies.

Stablecoins are an attempt to marry the stability of fiat currencies with the benefits of digital currency. They can be pegged to another cryptocurrency, but they can also be pegged to fiat currency, commodities, or other assets of value.

These coins are said to be backed. There are also non-collateralized stablecoins, which are those whose values are determined via an algorithm. But there have been a number of failed attempts at this like NuBits.

Do stablecoins work? Yes. They are much less volatile while still preserving the benefits of crypto: instant processing, security, and privacy.

Innovative Banking Services for Cryptocurrencies

In addition to offering something that’s more stable there are a host of innovations in the finance sector catering to crypto.

  • We are seeing traditional banks accepting cryptocurrencies and the rise of digital asset banks like Avanti, founded by Wall St. veteran Caitlin Long.
  • Helio Lending is pioneering cash loans backed by cryptocurrency as collateral.
  • JP Morgan recently launched its own digital coin.

These are all milestones for crypto holders that seem to be part of a trend.

In addition, Fidelity reports that a growing number of institutional investors (36% according to the survey) have part of their portfolio invested in cryptocurrency.

Conclusion

Cryptocurrencies are usually seen as an investment vehicle, but many hope to see it being used increasingly in lieu of fiat currency.

The rise of stablecoins and the greater acceptance of cryptocurrencies in the banking system show that digital currencies are going mainstream. Some may be disappointed by this but for those who want digital currencies to be a useful part of our daily lives, this is great news.