A stablecoin is a digital asset that minimizes the volatility of its price. Most are pegged to a real-world asset such as the U.S. dollar, gold, or silver. The price is remains relatively stable, even when the prices of other cryptocurrencies fluctuate widely. This makes stablecoins an attractive option for investors who want to avoid the volatile swings of the crypto markets. There are several different types, each with its own advantages and disadvantages. The centralized stablecoin is the most popular type. A central authority, such as a government or a bank, backs the stablecoin. These tend to be very reliable, but their reliance on a central authority makes them less decentralized than other types of stablecoins. Another popular type is the collateralized stablecoin, which is backed by digital assets such as Bitcoin or Ethereum. These tend to be more volatile than centralized stablecoins, but they offer a higher degree of decentralization.
Cointelegraph states that a Bitcoin upgrade to BIP21 addressing may eliminate the addressing method currently used by BitPay. If so, BitPay support of Circle’s USD Coin (USDC), the Gemini Dollar (GUSD) and Paxos Standard Token (PAX) may not be the biggest news in the near future:
“BitPay, the world’s largest provider of blockchain payment services, today announced the rollout of stablecoin payments for merchants and consumers around the globe. The company supports payment acceptance and settlement in any of three popular volatility-free stablecoins, Circle’s USD Coin (USDC), the Gemini Dollar (GUSD) and Paxos Standard Token (PAX).
With the addition of the three tokens to the BitPay wallet app, consumers are not only able to spend U.S. dollar-pegged currency at businesses around the world like Microsoft and Avnet, they’re also able to transact with the speed and flexibility of cryptocurrencies to pay friends, family, or other individuals. Wallet-to-wallet cryptocurrency transfers are spendable as soon as they’re received, eliminating the costs and delays of bank transfers or wires typical of other solutions.”
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group