Crypto giants Coinbase and Circle are teaming up to form a joint venture known as the “CENTRE Consortium,” a platform devoted to the mainstream adoption and development of stable coins.
Stable coins are growing in popularity because they are allegedly tied to fiat currencies like USD. Most of the time, fiat money is protected against inflation and other economic problems through government regulations, and to have cryptocurrencies tied to these monies is said to provide a lot of stability in the cryptocurrency market.
Many institutional investors have shown reluctance to get involved in the cryptocurrency space due to the volatility of entities like bitcoin and ether, which have been trapped in relatively bearish conditions since the start of 2018. This volatility has stemmed fears that money will disappear as soon as its invested, and many believe stable coins are the answer when it comes to getting institutional investors involved, which some say will bring a whole new level of legitimacy to the crypto space.
Stable Coin Controversy
That’s not to say, however, that stable coins haven’t brought about new waves of controversy. A few months ago, University of Texas finance professor John Griffin released a report alleging that the stable coin Tether, which is reportedly backed by U.S. dollars, was used to manipulate bitcoin prices back in 2017 when the currency peaked at nearly $20,000.
Read: What is Tether?
The document suggests that every time bitcoin fell by even a tiny margin, tether was used to purchase bitcoin and boost the price further by attaching it to a potential USD source. The report describes the events as textbook manipulation, though its claims have apparently caused some doubt amongst high-end crypto figures such as Ethereum co-founder Joseph Lubin.
Stable Coins and Their Growing Audiences
Putting all this aside, stable coins are consistently shown to have their audiences, and now Coinbase and Circle are grouping together to ensure those audiences grow. Circle co-founders Jeremy Allaire and Sean Neville explained in a statement:
“Coinbase and Circle share a common vision of an open global financial system built on crypto rails and blockchain infrastructure, and realizing this vision requires industry leaders to collaborate to build interoperable protocols and standards.”
Read: What Are Stablecoins? The Polarizing Solution to Cryptocurrency Volatility
A New Staple of the Crypto Space
Recently, the two startups worked together over the creation of Circle’s new USD Coin (USDC), which was developed last May. Coinbase recently announced that it would allow the trading of the currency on its platform, marking the first time the digital exchange has ever supported a stable coin since it first came to fruition six years ago. Representatives describe USD Coin as “fundamentally different” from other stable coins. They also explained in a blog post:
“We see USDC as a major step towards a more open financial system. The advantage of a blockchain-based digital dollar – like USDC – is that it is easier to program, send, use in apps, and store locally than traditional U.S. dollars.”
What Will the Future Hold?
Allaire recently commented that he’s not sure the future of finance even lies in bitcoin’s hands, despite what several evangelists and enthusiasts claim. He believes that government-backed money will always be the primary staple of any global marketplace, but that it will likely operate via blockchain technology.
He also said that USD Coin isn’t meant to replace the United States dollar; it’s just designed to make it more compatible with the cryptocurrency infrastructure and improve payment speeds:
“If people can exchange value over the internet without a toll extracted for payments, it’s pretty dramatic. It’ll make the web look like a cute experiment comparatively speaking in ten to 15 years.”
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