With the growth of the cryptocurrency ecosystem there have been heaps of innovation across a number of different sectors, especially with this revolutionary and disruptive technology. However, some of the innovations have come about as a way to curb too much enthusiasm.
It can be argued that Stablecoins are one of the most important innovations, but also one of the least exciting to come from cryptocurrency. They are important as they offer the value of the technology without the volatility, and can be far better regulated, but it also feels like the innovation has stopped in this space.
Stablecoins have been picked up and identified by as high a level as states and their governments, but in terms of advancing them and innovating them to a point where they can launch in the mainstream — as a Central Bank Digital Currency — for one example, is yet to be seen.
Former U.S. Treasury Secretary Lawrence Summers praised stablecoins, but he does not expect them to innovate to a point where they are viable in his lifetime. Stablecoins remain a good idea, and an innovation worth being tried and piloted, but there might not be enough interest in taking them to the next level.
Not in my lifetime
During a special episode of Circle co-founder and CEO Jeremy Allaire’s podcast, “The Money Movement” last week, Summers said:
“I’m sure there’ll be a variety of kinds of innovation, but I’d be kind of surprised, and, you know, I’ve been surprised many times before, if we got to some kind of global digital currency … in my lifetime,” he said. “I could be wrong, I think … we’ll see a ton of innovation that will work through stablecoins, and that will permit cross-border exchange with more ease.”
In Summers’ opinion, the case for cryptocurrency rests on three pillars, but two fail to make strong arguments in favor of the technology.
Firstly it does not seem likely that governments around the world will devalue traditional currencies to the point where people will no longer want to put money in them.
Even in the pandemic, it is not a narrative of destroying the current system for a new one just because central banks are finding it difficult to meet their inflation targets, under pressure from rising debts and the crisis caused by the pandemic.
“Second thing I think is that I don’t think crypto is going to be accepted as some kind of libertarian paradise,” Summers said.