The idea of stablecoins echoed throughout Facebook’s Libra project, which will reportedly involve a stablecoin backed by government currency. Following the footstep of Facebook, several companies are bringing their stablecoins to the growing market worldwide. The notion of Facebook’s stablecoins came through crypto echo chamber and then pushed it to public battlefield.
Because of the predominance of Asia, it could be dubbed as Ground Zero. Reportedly, Chinese government is the indispensible player here. People’s Bank of China expressed that its digital currency could now said to be ready after five years of work which will maintain a complex structure. The move of China is more aggressive than that of others which is suppose to drive other entities.
CBDCs and stablecoins walk along with smart-contract and blockchain project. There are two payment mechanisms available including on-chain integration of a volatile and the other is off-chain through the existing, clunky banking system. Programmability and smart-contract qualities are available in a proven monetary unit and important efficiencies in commerce are possible.
Central banks are also taking steps to cope with the China without the fear that a digital renminbi will earn a large role in international trade out of 65 nations of the Belt and Road initiative. In a report on a state-owned China Daily it is mentioned that a startling about-face was created by the head of the Bank of International Settlements where he rejected the value of digital currencies and he expected that other central bank digital currencies might come soon. Regional central banks are already examining digital currencies for interbank transfer. It is also assumed that state surveillance will be rose by CBDCs which can be especially held in China as they have the practice of encroachment into people’s freedom.
If the privacy assurance of stablecoins is strengthened then it can be fruitful to people. Now the choice is in between reserve-backed stablecoins and algorithmic stablecoins, where the clear leader is DAI. No third-party reliance is required in algorithmic stablecoins. On the contrary to that on-chain stablecoins might be gamed by high-frequency trading bots.