Why Stablecoins That are Fiat-Backed are the Safest and Best to Use.

Speaking from my own viewpoint, I would like to deal with a few commonly chattered topics by a few of my biggie good friends and gamers in the financial area.

Let’s start by getting rid of the huge fat elephant in the room. What a trip it has actually been for Terra LUNA, UST and the ever-debatable algorithm stablecoins.

Do Kwon sure tested the water with his algorithmic stablecoins. This stuff operates in a hot market where everybody buys in on the idea of speculations, similar to any other great ideas in a booming market and even in an uptrend market, TVLs, high APYs, yada, yada, yada. Nevertheless, what we have actually seen in the past week, has been ravaging but 100% anticipated.

It resembles any Ponzi-hyped job doomed to burst the bubble. The value of UST first cliff-dived 60% in worth to a low near $0.40. In the following days it became useless as its worth became pennies to the dollar. It was delisted from most exchanges that when supported it.

Moreover, the bleeding did not stop there; Luna has actually lost a shocking 99.99% of its value near $0.00013.

Depegging

The primary factor is that the rate of its governance token, LUNA, has plunged due to a significant market sell-off. UST has been unable to preserve its peg to the LUNA algorithm stability. If the Terra Structure or VCs do not bail out Terra’s community, this will be one of the most significant fiascoes in the history of cryptocurrencies.

Undoubtedly, I think this was a wonderfully premeditated, textbook-quality short strategy, and whomever you are, your amusing patience handsomely paid off.

And then, to rub salt into the wound, Yellen came out and emphasized her point that stablecoins need to be controlled. And some biggie even argued that CBDCs will become the stablecoins of crypto. SAY WHAT?.

Fiat-backed Stablecoins Vs CBDCs.

Let me ask the audience one basic concern, why are we here in crypto? Is crypto the like securities and stocks? Ladies and gents, CBDC is an entirely different animal than stablecoins.

Simply to bore you to death with knowledge, Stablecoins are decentralized private virtual digital possessions (VDA) issued on the blockchain that is pegged to a specific fiat currency. Users opt to use this type of borderless VDA because of its transparency, personal privacy, and fast deal times.

This is opposed to CBDC, which is a centralized and digitalized nationwide fiat that is controlled yet entirely managed by a single federal government or a country.

The China example.

Take China, for example. The essence of their version of CBDC is to rid the government’s problem of paper currency logistics yet to have a much better grasp on its citizen’s financial activities.

So again, to my biggie friends out there, CBDCs will not become the stablecoins of our times. It will just merely be a digitized fiat partly utilizing the function of blockchain IF ANY.

Simply put, CBDCs are issued from the perspective of a single central federal government that may not be on blockchain and bordered.

On the other hand, stablecoins are minted and negotiated on borderless blockchains, issued from the viewpoint of users. This is the main difference, PEOPLE!

Fiat-backed Stablecoins: Laws.

Now, let’s speak about guidelines, to be or not to be that is the concern. In fact, in my opinion, the answer is not merely black or white. Similar to crypto, just like a lot of things. There isn’t a right or incorrect answer.

I think all assets, consisting of digital assets, ought to be managed. The question is not whether it needs to or must not be managed. However who to control and how much involvement the authority put on the borderless digital properties. And who is that authoritative figure?

Crypto will always be decentralized which is its main point of it. I believe guidelines should be positioned more on the safety of users’ assets and not to manage or limit the issuers.

Finally, the truth is the only stablecoin that can be called a stablecoin must be and only be asset-backed stablecoins pegged to a steady value, much like MMXN.

Most notably, asset-backed stablecoins need to be released for the users with the point of view of helping them improve their lives. It must not be a digital coin that FOMOs the market in a “imaginative” Ponzi-like scheme, just so the few can benefit from holding on to a sizable market share.

Keep in mind, blockchain is made by the people for the people; it will just survive on if we stay true to this slogan. Be bold, be borderless people!