Stablecoins have seen a rise in popularity, this is quite evident from the fact that large corporations like Facebook and JP Morgan are trying to get on the bandwagon with their own projects.
At this point, stablecoins are mostly used by traders to hedge the price fluctuations of cryptocurrencies. Other than that, there has been no such real-world use cases for stablecoins other than a store of wealth.
But as more and more government bodies are eyeing state-backed national cryptocurrencies, Some see this as a threat to the existing stablecoins. There are high chances that these national cryptos will leave private stablecoins useless.
Talking on this matter, Samson Mow, Chief Strategy Officer of blockchain technology company Blockstream, was one of the speakers at the BlockShow conference that was held on November 15. Mow is known to be a keen watcher of bitcoin and a lightning network advocate.
He shared his views on Stablecoins, which according to him will never see a retail use case. Mow’s comments were directed towards popular stablecoin Tether (USDT) which he noted is the most preferred among investors due to its first-mover advantage.
Mow spoke in a panel dubbed “The progress of stablecoins — if any? Can I use it yet?” The panel representatives of various stablecoin companies alongside Hock Lai, president of the Singapore FinTech Association. Mow believes that Tether is the most controversial of all because it is the number one stablecoin in the market. He said:
“Tether is controversial because it’s the king of stablecoins, so it’s no surprise that everyone is trying to come at the king.”
Mow continued by dismissing claims regarding Tether which stated that one whale was responsible for the 2017 Bitcoin Bull Run. He said:
“Daily trading volume is $20 billion per day — 100 times larger than the next biggest stablecoin. So we see stupid things like theories about one whale manipulating Bitcoin price.”
Despite this, he still believes that Tether won’t find a retail use case as it is mostly used by traders to “take advantage of arbitrage opportunities.”
He was also keen on discussing the threat national cryptocurrencies pose to these stablecoins. Taking about the national digital currencies issued by central banks and the ones like Libra, Mow said that Bitcoin (BTC) won’t be a threat to stablecoins but the state-backed cryptocurrencies could easily disrupt their use cases. He believes stablecoins are just a step towards “hyperbitcoinization” and it is all a “temporary thing.” He further explained:
“The main threat they face is from the national cryptocurrencies. How open will those national cryptocurrencies be? …But stablecoins will then have no reason to exist with a national cryptocurrency.”
Mow concluded that USDT and other stablecoins will soon be migrating to the Blockstream’s Liquid Sidechain, which is a settlement network for traders and exchanges. He also added that the Japanese yen, Canadian dollar and Australian dollar stablecoins are currently being developed to be launched on the Liquid network in the future.
Talking of Facebook’s Libra he said:
“I think Libra is doomed.”
As reported earlier by The Daily Chain, Mow had previously noted during an event at the Litecoin Summit 2019, that the regulatory constraints placed on Bitcoin and cryptocurrencies could backfire on the regulators themselves. Ha then said:
“They might be hostile to it. But the thing is hostility to Bitcoin is a double-edged sword like if you are in power and you ban Bitcoin, and you fall out of power, then you’re screwed. […] People need to be careful when they are enforcing regulation and creating all this policy because you could be on the other side of the sword, down the road if you fall out of favor.”