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Bullish on Stablecoins?

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Garrick Hileman

Here’s how to invest and profit on their growth via Blockchain.com

Stablecoins, cryptocurrency tokens that use various mechanisms to keep their price “stably” pegged to a national currency like the US dollar, have been exploding in use lately. It’s a tool to give the user access to many of the benefits of cryptocurrency without the volatility.

They are an obvious choice for active traders who want to flow money between exchanges frictionlessly, and are similarly proving extremely useful for cross border payments in business transactions.

Of late, stablecoins have enjoyed even more growth as they are a preferred way to send money in and out of Decentralized Finance (DeFi) smart contracts. Making fiat money native to platforms like Ethereum will only make it that much easier to use applications on the platform.

There have even been promising regulatory developments around stablecoins. In the U.S., the Office of the Comptroller of the Currency officially clarified that banks can choose to use stablecoins for settlement, further reinforcing that idea that this new piece of financial infrastructure is here to stay.

While it’s not feasible to invest in stablecoins themselves, as their value is fixed, there is still a way to get exposure to this new asset class. A typical stablecoin is built on top of a smart contract enabling blockchain, like Ethereum.

These platforms use native cryptocurrencies (such as ETH in the case of Ethereum) to allocate computing power and manage spam on the network. If demand for stablecoins on a particular network grows, it’s possible that it’s native cryptocurrency (ie ETH) will also see more demand and price appreciation as well.

Four of the most popular platform choices for stablecoins are available for investment via the Blockchain.com exchange and wallet.

  1. Algorand (ALGO) has gained traction of late via various stablecoins operating atop Algorand network, including:
  • USDC
  • USDT
  • QCAD

2. Ethereum (ETH) is currently the leading stablecoin platform, with some of the more popular stablecoins including:

  • USDC
  • USDT (supported in the Blockchain.com wallet and exchange)
  • DAI
  • PAX (supported in the Blockchain.com wallet and exchange)
  • (Really it’s almost too many to list)

3. Bitcoin (BTC)

  • USDT is the principle stablecoin operating on the Bitcoin via the Omni overlay network

4. Stellar (XLM) has long served as a platform for various stablecoins, which are attracted to its fast settlement times and relatively inexpensive transaction fees

  • Stellar recently made waves with the announcement that the Ukrainian government would be testing its central bank digital currency on the Stellar network.

Looking for a non-US dollar linked stablecoin?

Amid growing concerns about the future of the US dollar (which dropped 7% in value in 2020), not everyone is keen on holding a US dollar backed stablecoin.

What alternative “price stabilized” currencies exist?

One asset-backed digital currency alternative to USD stablecoins you may want to consider is a gold-backed token such as DGLD.

Launched jointly by Blockchain.com and CoinShares in 2019, DGLD offers all the storage and transacting convenience of other natively digital currencies like bitcoin (BTC) and ethereum (ETH) but with the added feature of being backed by actual physical gold held in a Swiss vault.

In 2020 gold didn’t perform nearly as well as bitcoin (+301%) and ethereum (+477%), but it was up a respectable +24% for the year.

Crucially for many, it also has a track record of being significantly less volatile than cryptoassets like bitcoin.

If you’re interested in learning more about DGLD and other gold-backed tokens, and how they differ from and compliment ownership of cryptoassets like bitcoin, please check out our research primer on gold-backed tokens.

Dr Garrick Hileman is a visiting fellow at the London School of Economics and the head of research at Blockchain.com, the leading provider of cryptocurrency solutions and creator of the world’s most popular crypto Wallet and the Blockchain.com Exchange. You can read more of his analysis and research on Twitter @GarrickHileman and @Blockchain.

Source: https://medium.com/blockchain/bullish-on-stablecoins-db22a3c875b8?source=rss—-8ac49aa8fe03—4

Blockchain

NEXT Chain: New Generation Blockchain With Eyes on the DeFi Industry

[Featured Content] The cryptocurrency industry is booming throughout the past year, and the increase in the total market capitalization is definitive proof. The market is, at the time of this writing, valued at about $1.5 trillion. The same can be said about the DeFi industry. The total value locked in various protocols exceeds $39 billion, […]

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[Featured Content] The cryptocurrency industry is booming throughout the past year, and the increase in the total market capitalization is definitive proof. The market is, at the time of this writing, valued at about $1.5 trillion. The same can be said about the DeFi industry. The total value locked in various protocols exceeds $39 billion, […] Checkout PrimeXBT
Source: https://cryptopotato.com/next-chain-new-generation-blockchain-with-eyes-on-the-defi-industry/

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‘Bitcoin Senator’ Lummis Optimistic About Crypto Tax Reform

Sen. Cynthia Lummis, the first in the Chamber to own Bitcoin, says bipartisan support will accelerate crypto tax reform.

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Sen. Cynthia Lummis (R-Wy) expressed hope on Wednesday that Congress will be able to reform the tax rules governing cryptocurrency, which have been a longtime bugbear for Bitcoin owners and the burgeoning crypto industry.

“We’re optimistic we can find bipartisan agreement on that issue,” said Lummis during a meeting with crypto executives and policy makers on the social media app Clubhouse.

The comment from Lummis, who has owned Bitcoin since 2013, came in response to a question about whether Congress will pass a proposed law calling for a “de minimis” tax exemption for small cryptocurrency transactions.

Currently, IRS guidance stipulates that any minor crypto transaction—such as sending $5 worth of Bitcoin to a friend or using it to buy a cup of coffee—can amount to a capital gains event. Critics say this rule creates needless tax headaches, and discourages innovation by limiting the use of crypto in day-to-day transactions.

And while the IRS has become preoccupied with collecting tax on crypto—a question about virtual currency is now at the top of filers’ income tax return—the agency has done little to simplify the process for reporting it.

Lummis’s interest could help accelerate the passage of crypto tax reform, which has been proposed in bills before the House of Representatives, but never in the Senate. Lummis, whose home state of Wyoming has branded itself as a crypto hub, also pointed to a new Financial Innovation Caucus she is leading with Sen. Kyrsten Sinema (D-Az) as evidence of bipartisan interest in the issue.

Bitcoiner Cynthia Lummis Wins US Senate Seat

Policy researchers on the Clubhouse call cautioned, however, that passage of crypto legislation is unlikely to occur in the near future. The Biden Administration and Congress is currently wrangling over weighty issues related to the pandemic and economic stimulus, so crypto taxation—a relatively boutique issue—is unlikely to be a high priority.

More broadly, members of the call noted that lawmakers are becoming more knowledgable about cryptocurrency, and not only at the federal level.

Nathan McCauley, the CEO of crypto storage service Anchorage, said that his company has been speaking with several state governments about adding crypto to their corporate treasuries—a move that would mirror what big private sector companies like Tesla and Square have done in recent months.

McCauley suggested the states’ interest in crypto is related to a search for alternate finance and investing options at a time when bond markets are in a prolonged slump.

Checkout PrimeXBT
Source: https://decrypt.co/60059/bitcoin-senator-lummis-crypto-tax-reform

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Billionaire Hedge Fund Manager and a Former CFTC Chairman Reportedly Invested in Crypto Firm

The hedge fund manager who predicted BTC’s rise to $40k in 2018 and the former CFTC Chair, a.k.a ‘crypto dad’, have invested in BlockTower Capital.

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The hedge fund manager who predicted BTC’s rise to $40k in 2018 and the former CFTC Chair, a.k.a ‘crypto dad’, have invested in BlockTower Capital. Checkout PrimeXBT
Source: https://cryptopotato.com/former-cftc-chairman-and-a-billionaire-hedge-fund-manager-reportedly-invested-in-crypto-firm/

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Bitcoin Price Analysis: Back Above $50K, But Facing Huge Resistance Now

Bitcoin is up by a solid 6% today as the primary cryptocurrency surged by over $3000 over the past 24 hours. Quick recap: bitcoin is recovering after a heavy correction over the past week, in which the cryptocurrency dropped by around 25% as it broke beneath the February ascending price channel (as shown on the […]

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Bitcoin is up by a solid 6% today as the primary cryptocurrency surged by over $3000 over the past 24 hours. Quick recap: bitcoin is recovering after a heavy correction over the past week, in which the cryptocurrency dropped by around 25% as it broke beneath the February ascending price channel (as shown on the […] Checkout PrimeXBT
Source: https://cryptopotato.com/bitcoin-price-analysis-back-above-50k-but-facing-huge-resistance-now/

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