Over the next few days, we’re adding four stablecoins to Jaxx Liberty: Paxos Standard (PAX), Gemini Dollar (GUSD), TrueUSD (TUSD), and USD Coin (USDC). This blog post explains the significance of this addition, the broader adoption of stablecoins in the cryptocurrency ecosystem, what they are, and some of the applications.
Significance of Stablecoins
Users of Jaxx Liberty can soon make use of a type of digital asset that has a fixed dollar value. All of the stablecoins that we are announcing today are denominated in United States Dollars and they have a track record of approximately stable value.
Stablecoins are digital assets that have a value that is approximately stable relative to a specific asset. For example, 1 GUSD token is worth $1 USD (or nearly $1 USD). These tokens address a long-standing criticism of our sector: cryptocurrencies are volatile.
Stablecoins are not volatile, and are designed with various mechanisms to try to ensure that they stay worth the target value (in the designated currency).
Stablecoins are one way of gaining many of the benefits of cryptocurrencies while also having the benefit of a fixed quantity of tokens being worth a fixed amount of a certain currency. This opens up new ways of using digital assets for Jaxx Liberty users and we believe that adoption by wallets is the key to mass adoption of stablecoins.
What Are Stablecoins?
Stablecoins come in several varieties (e.g. algorithmic stablecoins, gold-backed stablecoins, etc.), but the type of stablecoins that have the best adoption are fiat-equivalent stablecoins. To date, the most popular fiat stablecoins have been linked to the US Dollar (USD), likely due to the preeminence of the US dollar in international trade.
The linking of stablecoin token to USD is typically done in one of two ways:
1) Creating a limited purpose trust company in New York state (under the supervision of the NYDFS).
2) Using an existing trust company or similar methods to create a pool of dollars that the tokens are somehow related to.
From our point-of-view, the most interesting stablecoins are the ones that have a clear legal structure (and no regulatory actions), appropriate backing, a proven track record, usefulness, and are compatible with the existing blockchain ecosystem. Today’s stablecoin announcement concerns stablecoins that meet all of these criteria and passed our legal review.
We anticipate adding more in the future and continuing to make Jaxx Liberty a wallet that lives up to the trust its hundreds of thousands of users around the world. We are also keeping a close eye on developments relating to stablecoins such as DeFi as well as next-generation blockchain applications that take advantage of the novel characteristics of fiat-equivalent stablecoin tokens.
What Are The Applications Of Stablecoins?
We’re in the early days of the applications for stablecoins. Yet already there is robust secondary market trading of many tens of millions of dollars per day.
Stablecoin companies tout the applications of stablecoins for: payments, international cryptocurrency exchange transactions, stability of cryptocurrency holding value, capital markets settlement, better monitoring of transactions, and more. We regard stablecoins as a new type of infrastructure upon which we’ll see many new innovations and applications in the years to come.
Phase IV Of Cryptocurrency: Stablecoins
Phase I of cryptocurrency was the launch of Bitcoin and the creation of systems and businesses built around Bitcoin, such as cryptocurrency exchanges, dealers, wallet providers, merchant services, etc.
Phase II of cryptocurrency was the development of Ethereum. Ethereum opened up a new world of smart contracts, and ultimately enabled the next phase: tokenization. Ethereum has proved to be a viable competitor to Bitcoin for some use cases, and ETH has maintained its dominance for the last few years as the second largest cryptocurrency in the world. Jaxx (the predecessor product to Jaxx Liberty) emerged during Phase II, following the founding and launch of Ethereum by our founder Anthony Di Iorio (along with his co-founders and many others around the world).
Phase III of cryptocurrency was the development of tokens (e.g. ERC20 tokens) and global recognition of what blockchains can do. Tokens are a level above the native blockchain’s transaction and are an important application of Ethereum. Jaxx Liberty and its predecessor product were very active in Phase III’s early days, and Jaxx Liberty continues to support a wide variety of tokens.
Phase IV of cryptocurrency is the development of robust new businesses based around tokenization. Stablecoins are the best example of a Phase IV business as they combine robust tokens/smart contract systems with corporate structures that combine characteristics of offline businesses with the new token-enabled blockchain economy.
Updating Your Jaxx Liberty to v2.3.1
You may need to update your Jaxx Liberty to v2.3.1 in order to see the new stablecoins that will soon be integrated.
If you have any issues managing, holding, transferring, or using stablecoins in Jaxx Liberty, please do not hesitate to reach out to our complimentary global support team: https://support.decentral.ca/
Thanks and until the next time!
Jaxx Liberty team