The reign of the bitcoin as the cryptocurrency with greater market value seems to be threatened. The competition is coming from the new digital alternative currencies, the so-called stablecoins.
Currently, the bitcoin represents more than half of the global market of cryptocurrencies. However, the stablecoins are gaining strength because they seem to fight the main villain of investors: the fluctuations.
They are designed to avoid large price variations, the main problem faced by the bitcoin and other cryptocurrencies, in the same way as a store of value. In theory, the stablecoins should be more useful to pay for goods and services or transferring money internationally.
Most of these currencies are supported individually by traditional assets, such as the United States dollar. There are still those that are ensured by cryptocurrencies clusters. Others use algorithms to maintain stable values.
Some experts believe that the stablecoins can help the cryptocurrencies to gain more visibility in the conventional market.
Libra is one of the stablecoins that comes to compete with the bitcoin
A substantial stablecoin that promises to move the market is the Libra, which is being developed by Facebook. The company recently revealed that the project is part of the effort to expand its activities, going beyond social networks. The goal of the company is to gain space in e-commerce and global payments.
The Libra will be supported by a buffer of real assets. This includes bank deposits and short-term government bonds. That way, it should become more stable than other cryptocurrencies.
According to a review from UOL, some cryptocurrencies operators and exchange offices claim that investors use stablecoins to protect against spikes in the price of the bitcoin and as a means of negotiating cryptocurrencies without using dollars.
Thus, the combined traded volumes in the main exchanges of five of the biggest stablecoins, including Tether and USD Coin, have increased in recent months. According to the data from a research firm in America, Coin Metrics, volumes rose to US$ 74 billion in May. The amount represents an increase of four times comparing to December. “If they feel that the bitcoin is going up or down, they prefer to overdraw stablecoins. With that, they can negotiate faster and get back to market.“ said Thomas Puech, from Enigma Securities, cryptocurrencies stock exchange based in London. And that is why the stablecoins can threaten the leadership of the bitcoin.