Stablecoins

Abstract

In just over a decade, the payment industry has seen the launch of cryptocurrencies and their explosive growth, driven by progress in digital technology applications. However, owing to a range of factors, not least their significant volatility, cryptocurrencies have not been adopted on a massive scale, but instead are used largely for speculative purposes. Both national authorities and the private sector have attempted to tackle volatility. The private sector's answer was stablecoins, that is, cryptocurrencies that aim to keep a stable value relative to a specified asset, or a pool of assets. There are currently three means by which stablecoins achieve this: legal assets, crypto-assets and algorithms.