Are stablecoins really stable?

A new round of debate opens regarding stable coins, with Tether as the main topic and benchmark.

A new round of debate opens regarding stable coins, with Tether as the main topic and benchmark.

The stablecoin market has grown tremendously and this has caused concern among the leaders of banking institutions and even governments in several countries.

“There is every reason to think that stablecoins – at least, many of the stablecoins – are actually not particularly stable” said the President of the Reserve Bank of Boston in a recent statement. He also expressed concern, saying “a future [financial] crisis could easily be triggered as they become a more important sector of the financial market, unless we start regulating them.”

Characteristics of Tether:

  • Tether allows you to easily exchange your coins for real money.
  • It implements Litecoin’s blockchain technology.
  • Your transaction fees are zero.
  • Its balance sheets are published in real time.

However, the Reserve Bank of Boston attempts to show what would happen if Tether falters and how this would affect the cryptocurrency market and the funds of many investors.

What happens if Tether falters?

Many opinions on social media agree that a reason is being sought for people to stop using Tether and return to traditional short-term credit markets.

The situation is happening because the owners of large banks and important governments are realizing that they no longer have absolute control over money, hence the war against cryptocurrencies.

Clearly, the rise of Tether does not benefit them and so they are looking for reasons to instill fear in investors or simply try to bring down or cause the collapse of a stable cryptocurrency.

Is the cryptocurrency market driven by stablecoins?

The problem with stablecoins is that just as they have rapidly increased in popularity they could also exit the market with the same speed with which they entered.

We have already seen cases of “stablecoins” that have gone out of their limits and ended up crashing, but it should be mentioned that they are not as solid as Tether.

A hypothetical collapse of Tether could wreak havoc on the cryptocurrency market because it is one of the most traded pairs for almost all of them.

For all the liquidity it provides to the sector, a possible crash would affect the entire crypto ecosystem and would be very beneficial for the world’s banks that hope to retain their control.

But it is not only Tether that is being talked about, there are other coins like Circle that have taken market share from it and that is positive for cryptocurrencies, because if there is more diversification it would not be so painful the fall of Tether.

Without Tether, the market could still be sustained because there are other stablecoins that can sustain it and more and more are appearing.

It is envisioned that Tether will be handled with better auditing, thereby increasing confidence in USDT and also creating regulations for stablecoins that follow in the path.

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