Tuesday, October 8, 2021

Jeff Garzik Thinks Stable Currencies Are the True Staples of the Industry

Considering there is so much hype surrounding bitcoin and other mainstream altcoins, is it possible we’ve forgotten about stable currencies? According to Jeff Garzik, that’s certainly the case.

Jeff Garzik: Stable Coins Have a Lot to Offer

Garzik is a former bitcoin core code contributor. While he’s confident bitcoin has a lot going for it, he believes the real staples of the crypto industry are stable coins, which he says are more valuable in a lot of ways in that they heavily mimic the properties and qualities of fiat. He explains:

Product-wise, we’re in a generational shift. The stable coin is here to stay and now people are building on top of that… The next big event is all of the decentralized financial products - the loans and the credit - built on top of those layer two stable coins, which are built on top of the layer one cryptos like a metronome or bitcoin.

He comments that in many ways, stable coins can be used the way one might use cash, i.e. the U.S. dollar or the euro. For example, you couldn’t necessarily take out a home loan in bitcoin or Ethereum given that these two currencies are highly volatile, but a stable currency-based home loan is another story. He says:

You would not write a 30-year mortgage in BTC. That would be financial suicide for either the mortgager or the mortgagee, but you can do that with a stable coin. Once you have a stable cryptocurrency, you can start creating loan products, credit products, 30-year mortgages and investments products that pay out dividends. It opens a big world. Stable coins are built on top of a cryptocurrency like BTC, and this layering function is what makes the stable coin safe. You have unstable assets like MET or BTC as collateral, and say you have $150 worth of unstable collateral parked in a smart contract. Then that will issue $100 worth of stable token tied to the U.S. dollar. What that has done is unlock a whole new universe because before bitcoin, Ethereum, etc., prices [were] volatile.

The unfortunate fact is that not all stable coins have the same reputation. Tether, for example, is often looked at as shady considering a report emerged in 2018 from University of Texas professor John Griffin that suggested it was potentially manipulating bitcoin in the prior year to surge higher. In addition, the currency is linked to Bitfinex, a trading platform that has been swamped with legal problems for some time.

We’re a Little Behind…

Also, Garzik says that blockchain is still “too new” to be utilized in the ways he’s suggesting. He comments:

Ten years in, we’re still in the ‘I’m building a blockchain’ days. DeFi is the first ‘I’m building on top of blockchain’ kind of use case.

The post Jeff Garzik Thinks Stable Currencies Are the True Staples of the Industry appeared first on Live Bitcoin News.

Jeff Garzik Thinks Stable Currencies Are the True Staples of the Industry

Cryptocurrency is a digital currency that uses encryption (cryptography) to regulate the generation of currency and verify the transfer of funds, independently of a central bank. Cryptography is the practice and study of techniques for secure communication in the presence of third party adversaries.

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