Does the decentralized currency based on mathematical and logical principles precede the digital representations of stable assets?
This ancient question was addressed by Nic Carter, co-founder of CoinMetrics. He said that while the principle of stable digital currencies preceded Bitcoin, the current crop of stable currencies dominated by Tether (USDT) is quite recent.
"Stable coins are a fairly old idea," Carter said, evidencing the emergence of Liberty Reserve and e-gold. The Costa Rican-based digital currency, Liberty Reserve, was listed as the "oldest, safest and most popular payment processor," but it was closed in 2013 by US prosecutors. UU. Under the clause of the Patriot Law relating to the operation of a money transmission business.
The digital equivalent of the yellow metal, e-gold, was curated by oncologist Douglas Jackson in 1996. In 2006, when processing more than $ 2 billion in transactions, the "stablecoin" had the same fate as Liberty Reserve and Jackson jailed for «Conspiracy to participate in money laundering«.
Carter traced the ‘market speed’ of popular stablecoins, against the peak 2006 gold direction that proves they have “extremely high turnover” stablecoins. Among the currencies were traced, USDT, Standard Paxos, TrueUSD and USDT ETH. Other notable stable currencies such as GeminiUSD and Maker’s DAI were not considered because their "values are very high."
Stable currencies tend to be distinguished from other cryptocurrencies because their use per unit of market capitalization is noticeably greater than the rest, Carter said. Among the stable currencies registered, USDT has the highest use per unit of market capitalization ratio, while GUSD has the lowest.
Returning to the chicken and egg analogy, Carter states that before the notion of Bitcoin, even "digital non-sovereign money" was backed by the US dollar. Tether is just a blockchain version of past analogies then.
Carter predicted that if regulators stay at bay to control stable currencies, they could be the "first genuine killer application of cryptocurrencies."
The conclusion is that stable currencies have dominated and have been dominated by the regulated market since before Bitcoin, probably even David Chaum's money. Tether, Paxos, TUSD and others are simply a manifestation of the genuine demand of the market to have a digital currency linked to something of value, with relative stability and that works according to the rules of the regulations. Carter concluded:
“Since the dawn of the Internet, there has been a demand to use online transactional systems that are slightly regulated and named by the Fiat. The current crop of stable currencies simply satisfies this demand in a new way. ”