Digital Securities
Will Facebook launch a Stablecoin?
Identifying a Trend
Here at securities.io, it is clear that we believe digital securities will play a large role in shaping finance in the years to come. It is not the only implementation of blockchain which we feel will serve the industry well. Another reason, which has been identified as an emerging trend by many, are stablecoins.
Stablecoins are blockchain-based, digital assets, which derive their value from another stable asset. Most traders affiliate the term with a digital asset backed by USD – meaning the digital token will rise and fall alongside the FIAT currency. Realistically, these stablecoins do not need to be backed by USD – they can be backed by any asset of value deemed to be ‘stable’ in the eyes of investors.
Interestingly, it would appear as though each of these trends have the potential to hasten the adoption of the other. Here, we take a brief look at the relationship between these developing trends.
Why Do they Work Well Together?
Digital securities and stablecoins appear to be a great pairing. Each utilize blockchain technology, which open new avenues of funding and investment. Furthermore, each of these allow for an escape from the volatility typically associated with cryptocurrencies – thereby allowing for financial security, while still being invested in the future of finance. Beyond these traits, they still provide holders with the increased transparency and autonomy long associated with blockchain.
With these shared attributes, it isn’t surprising to find that the types of investors attracted to one, are often intrigued by the other. Both digital securities and stablecoins appeal to the same camp, allowing their users to ‘have their cake, and eat it too’.
New Entrant
Listing each of the stablecoins in the industry has become a difficult task. Only recently the cryptocurrency industry turned to Tether for all of its stablecoin needs. With this token coming under fire in recent months, competitors saw the opportunity to pounce. And so they did, with the release of their own stablecoins. This has resulted in the following, alongside many others.
- Gemini Coin
- TrueUSD
- USD Coin
- Paxos
Recognizing their ability to influence pre-existing infrastructure, and the potential of stablecoins, it should come as no surprise that Facebook has been toying with the release of their own coin. While their involvement in blockchain is well-known, the capacity to which they are involved has eluded the public to date. It is now being said that Facebook has been approaching cryptocurrency exchanges regarding the support of a Facebook stablecoin.
The Facebook Effect
With their company umbrella containing WhatsAPP and Instagram, a cross platform stablecoin issued by Facebook would revolutionize the industry overnight. No longer would blockchain endeavours seem obscure and outlandish to the general public. This technology would now be front and center, on a platform trusted worldwide (despite the fact that they probably shouldn’t be). In addition, the remittance industry would be turned on its side, as global value transfer would become instant and cheap.
Interestingly, it is being said that this coin would not be backed solely by USD. Rather, Facebook is believed to be ‘pegging’ the coin to a variety of FIAT currencies. Doing so will shield the coin from fluctuations in value, even greater than one backed just by USD.
While these speculations have been floating around for months, they were recently recharged, as the New York Times released an article detailing the potential of a Facebook Coin. While Facebook themselves have not released any announcements confirming these speculations yet, it is expected that they may make their first splash into the waters of blockchain during 2019 at some point.
Recent Usages
As stated, there is a recent trend being seen in which stablecoins play integral roles in STOs. Here are two examples of this, with each offering being backed by USD.
South Americas Largest Investment Bank to Utilize Gemini Coin in STO
