The Case for Stablecoins: A Much-Needed Asset Class or the Worst Crypto Idea?

The case of cryptocurrencies' global relevance remains a moot point given its wildly volatile nature, an aspect which has spurred a billion dollar crypto-exchange market.

At its peak, the crypto market was $200 billion short of the magnificent $1 trillion mark; however, it has since plunged to a $205 billion total market cap after the price frenzy was corrected in 2018.

Away from frantic Bitcoin swap trading, high-leverage investments and ETF hopefuls, a group of businesses are pivoted on creating a "Stablecoin," or a cryptocurrency that does not fluctuate in monetary value.

From an economic perspective, maintaining a stable monetary value for a decentralized, limited supply cryptocurrency is seemingly impossible; demand and supply metrics ensure prices keep increasing or decreasing, which is the case with a majority of the 1,800-plus cryptocurrencies in the world today-traded on just close to 200 exchanges.

Circle is backed by big-name banks looking to enter the cryptocurrency market.

Some cryptocurrency executives remain divided over the best method of achieving price stability for digital assets.

Coinfloor Director Obi Nwosu maintains that robust regulations will attract institutional money into the market, indicating stablecoins may not be needed if liquidity is adequate.

Stablecoin outfits require centralized bodies to control their supply and back their tokens, which ultimately leads to a market conflicting with the decentralized ethos of cryptocurrencies and blockchain technology, according to Nwosu.

The entrepreneur considers stablecoins as the "Worse of both worlds," referring to cryptocurrencies and blockchain technology.

While the fight for solving scaling issues, price volatility and ease-of-payments prevails in the cryptocurrency space, only time will decide what direction the market takes-favoring Goldman Sachs-backed ideologies or Nakamoto's free-market solution.