As if the ancestor were already considered old-fashioned and outdated, one of the debates that regularly animates the financial community would consist in the search for the “heir”, of Bitcoin.
It was a while, its dolphin Litecoin, before Ethereum, then its Chinese versions (NEO, TRON …) came to take the light in the limelight. The contenders tried their luck sometimes shone a while and now for some, are struggling for their mere survival.
But now is the time for stablecoins, these wise and “domesticated” cryptocurrencies. They are called the future of the industry.
Most often linked, backed by fiat currencies, it would represent the best of both worlds: the age and respectability of fiat currencies boosted by the innovation of crypto-assets.
Except that these hybrids already bear within them the germ of their irreversible failure: being so intimately attached to fiat currencies will guarantee the stablecoins to sink in concert when the reign of fiat money ends.
One thing is clear: if in principle, stablecoins undeniably represent part of the crypto monetary future, only currencies which will be backed by tangible assets will find their place. And at the top of these tangible assets, it is probably gold that will take center stage, as it has done for 5000 years!
Bitcoin and physical gold, universal life insurance
Few Bitcoin enthusiasts who do not show a parallel attraction for physical gold.
This link is however counter-intuitive: on the one hand, an original, tangible material, the famous “Barbaric relic”, extracted, manipulated and exchanged by individuals for 50 centuries, mineral product of a geological and natural action. It is the rustic value of workers in ancient times, as much as modern economies for which it was until recently a ” standard “
On the other, an eminently recent creation (a few thousand days), digital and virtual in its strictest sense : the Bitcoin. Creation of geek, for geeks who by a process as difficult to explain as relentless, impose themselves day after day as a new standard.
And yet, once past the initial impression, the commonalities of these two very distant concepts are obvious, however. I would spare you the parallel classics between gold and Bitcoin, essentially supposed to justify the value of the second compared to its resemblances to the first: finite quantity generating scarcity and therefore value, difficulty of ” mining »Whether physical or IT, reserve role / safe haven, etc.
“In an era of economic, even existential, uncertainty, owning gold and Bitcoin offers the certainty of being able to” face “any situation. “
No, the similarities are more fundamental and are to be sought in much more visceral strata. The two assets deeply embody values of independence, universality and freedom, transcending physical and cultural boundaries. Whatever the circumstances, owning gold and bitcoin offers the certainty of being able to “face” any situation.
In the current era, marked more than ever by uncertainties of an existential nature, or by the specter of a collapse who would inevitably come, these criteria are decisive. At all times and in all places, the owner of Bitcoin and gold will be safer than the one whose pockets will be stuffed with stripped paper money of the least value.
What is the point of stablecoins backed by … instability?
It has not escaped anyone, stablecoins occupy and even extend beyond crypto media space, occupying debates within central banks and major international financial institutions. If these are the inclinations of Facebook and its Libra project which accelerated the process by pushing nations out of the woods on the subject, we now know that central banks have been thinking about it for a long time, like China, which recently confessed think about his crypto-yuan since 2014.
The proliferation of stablecoins
So the stablecoins are now “fashionable”: everyone wants theirs! This new interest has several main explanations:
- The stablecoins are presented as a domestic alternative to turbulent traditional cryptocurrencies and their incessant fluctuations,
- as such, they are more suitable for setting up a business case and model which – precisely – have need stability,
- their attachment to fiat currencies brings them a coloring of respectability in these times of ultra-regulation
In short, stablecoins would represent a perfect alchemy between the technological contributions of Bitcoin and its blockchain, and fiat currencies that states would simply like ” upgrade »Towards a version 2.0 in order to face a new century of triumphant capital growth!
At this stage of the story, you feel it happen the ” Yes, but ” ?
The illusory stability of fiat currencies
The few decades of relative stability in Western currencies – and first of all the dollar – must not obscure the characteristic of national currencies: their potential colossal fluctuations. These fluctuations may be due to external causes, or inconsistent national policies. If it’s easy to mock Bitcoin and its supposed dizzying variations, what to think of the course of the Petro venezuelan in the context of hyperinflation 2 to 3,000% per year in recent years, or currency Zimbabwe who in 2008 lost 98% of its value every day?
Do these examples seem exotic to you? Who remembers that the France experienced hyperinflation in the late 17th century, with months at + 300%? (forcing it to generate mass and panic assignats, paper money).
Suppose that a fiat currency is stable by nature, is to show selective myopia. And the dollar, as the euro are not immune to such a storm. Is it indeed worth remembering that the United States has renounced the gold standard since the Jamaica Agreements of 1976?
Unsecured Money on Tangible Assets: A Confidence Problem
It will be recalled that for a very long time – and until fairly recently – , nations based the strength and credibility of their monetary systems on convertibility of their currency into precious metals. The user of the monetary system based his trust on the fact that the currency used to exchange with his fellows was either literally made up of a certain amount of a rare metal, or possibly exchangeable at any time against it.
However, as the powers renounced to calibrate the value of their currency to tangible precious assets, confidence, “Social monetary contract” changed in nature: Users were therefore asked not to place their trust in a “sounding and stumbling” material guarantee, but on a moral, if not worse, ideological guarantee.
The State, centralizing authority, the Central Bank, would henceforth take care to allow the system to function and to guarantee the face value of a coin or a banknote in paper or vile metal. A few decisions taken behind closed doors at post-World War II international summits, we had just broken with several thousand years of monetary practices …
Thus ends the first part of this dossier devoted to the subject of stablecoins and their challenges. In the next part, it will be time to explain, not only why only stablecoins backed by tangible values will make sense in the future, but also how gold and other precious metals will have to go through tokenization to win the battle for liquidity and keep their millennial role!
Nice to meet you, it’s Hellmouth! Editor-in-chief of Bitcoin, the crypto media you are honoring to survey right now (well done, you have taste).
Crypto-enthusiast of the second hour, nothing is more important to me than supporting the global adoption and democratization of the treasures that the blockchain offers us.
I write articles between two cocktails in Tahiti, my adopted island, and do not hesitate, if the opportunity arises, to feast on a plump scam or a little too enterprising Ponzi pyramid.
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