Coinbase joins the stablecoin craze

coinbase stablecoin

Joining in the recent craze of exchanges listing stablecoins, Coinbase has added Circle partner’s USD coin to its selection of coins and tokens.

 

Coinbase is one the the most popular exchanges in the world and traditionally holds considerable sway on markets, particularly in the United States. The recent addition of the ERC20 token, 0X (ZRX), for example, caused a large increase in volume and price for the asset. The possibility of Basic Attention Token (BAT) also being added soon seems to be adding to its price momentum, as well.

 

But this coin is a different beast entirely. It is not intended to fluctuate in value, and unlike some other long-running stablecoins, the USD coin has remained steady at its pegged value, tied to the U.S. dollar, for the time being, anyway.

 

Recently, the most popular stable coin, Tether, had been experiencing issues due to rumours surrounding problems with banks and potential insolvency that caused the coin to “lose” its peg to the U.S. dollar. Traders and exchanges sold large quantities of the coin in exchange for Bitcoin and USD fiat, causing a sudden drop in value; something that is not supposed to happen to a stablecoin. It seems that exchanges are swooping in on this opportunity to wrest the crown from Tether’s grip and seize the stablecoin crown.

 

One might wonder why an exchange like Coinbase, which already accepts fiat to crypto purchases, would need a stable coin at all. It should be recognized that while Coinbase can accept fiat in many countries, there are barriers that prevent such transactions in many regions. Thus, the stablecoin can ease the ability for traders to purchase, sell, and transfer out USD-equivalent funds to other exchanges, thereby significantly increasing the potential for liquidity between cryptocurrencies on numerous exchanges and Coinbase itself, with its relatively limited range of crypto offerings.

 

It is also much easier to use a tokenized version of USD to store value, to execute rapid transactions, and to integrate into programming such as in DApps. It’s clear Coinbase is playing the long game here and likely envisions many future opportunities to exploit the advantages of stablecoins over traditional fiat.

 

The biggest loser in all of this is undoubtedly Tether, as it is bound to lose significance over time with the growing range of available stablecoins that offer far more transparency and accountability to traders.

 

Source:

https://www.coindesk.com/coinbase-adds-its-first-stablecoin-tied-to-the-us-dollar/

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