Macro guru Lyn Alden says that stablecoins are currently serving two main use cases in this decade.
In a new interview with Anthony Pompliano, Alden says that as a digital representation of currencies, stablecoins are crucial to the operation of crypto exchanges.
“Stablecoins are serving two significant roles right now. One is as a unit of account for a lot of trading platforms, either centralized offshore exchanges or in some of the DeFi [decentralized finance] markets.
It’s basically a digital representation of dollars. It’s still dollars. I’m not talking about the algorithmic variety, but the actual fiat-collateralized variety. Those are just dollars in this kind of more efficient wrapper.”
Aden also says that in some nations, stablecoins are also used to minimize the impact of volatile currencies.
“The second use case, the one that actually interested me more, is people in emerging markets or frontier markets, in countries with failing currencies, stablecoins are useful for them to hold for kind of intermediate-term savings.
I had an Argentine who described it to me very well, he’s like money that I’m going to spend in under a month, I’ll hold in local currency. Money that I’m going to hold for several months, I’ll hold in stablecoins, and money that I want to put away for three to five years, I’ll put some of that in Bitcoin.”
She says that the nascent asset class is making the US dollar more accessible, particularly with the emergence of technologies such as Lightning Labs’ Taro protocol, which can facilitate the low-cost transfer of greenback using the Bitcoin network.
”I think that there is a demand for dollars globally and stablecoins just happen to be the technology that allows them to get their hands on dollars even if their governments and their banking networks are not making them available or trying to restrict access. I do think that stablecoins have that purpose this decade.
That’s why I also think that there’s cool things like Taro on Lighting that could potentially bring stablecoins over to Bitcoin and it just becomes whatever network is most efficient to transact those dollars around because those are less about pure decentralization and more about what can give people access to a cheap ability to access that foreign central hub of dollars.”
IDon't Miss a Beat – Subscribe to get crypto email alerts delivered directly to your inbox
Check Price Action
Follow us on Twitter, Facebook and Telegram
Surf The Daily Hodl Mix
Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Featured Image: Shutterstock/Salamahin/Susanitah