Two more stablecoins are to appear on the crypto market. The first of which, the Gemini dollar, is introduced by the Winklevoss twins, and the second is the Paxos Standard.
The Winklevoss brothers have announced the release of a dollar-based token, the Gemini dollar. The regulated stablecoin plans to be equivalent to the U.S. dollar giving users the opportunity to maneuver U.S. dollars on the ethereum network. The stablecoin has already been given the thumbs up by the New York Department of Financial Services.
The very same regulatory department has approved another stablecoin, this being the Paxos Standard coin from the Paxos Trust Company, a blockchain fintech firm. This coin is based on the ethereum network and will also be equal to 1 U.S. dollar.
Stablecoins, coins backed up by a reserve, corresponding to the number of coins on the market, allow blurring the lines between the more traditional finance system and the crypto market. Unlike the crypto we are accustomed to discuss, stablecoins are less an investment, and more an instrument used to make purchases. Their reserve can be a fiat currency, in both the above-mentioned cases it is the U.S. dollar, it can also be a cryptocurrency or another asset such as gold. This is more convenient when approaching crypto not from the side of something to invest in, but as a means of purchasing something. Bitcoin is often referred to crypto gold, since the original currency is better to invest in, Tyler Winklevoss explained: "If you buy something with bitcoin or ether you could be dramatically under or overpaying."
Both these stablecoins approved on the same day will create competition for tether, currently, the most popular U.S. dollar-backed token on the market.
WHY IS THIS IMPORTANT?
- The very idea of a stablecoin is something that aims to draw closer two structures, that currently need reconciliation.
- If the approved stablecoins manage to overcome the problems that their predecessors faced, such as providing audits for their reserves, then possibly in the near future purchasing something using crypto will be much easier than it is now.