A recent study indicates that the total demand for stablecoins (stable cryptocurrencies) has exceeded USD 150,000 million. This, the research concludes, proves the need for people to have a “digital dollar”.
The work was carried out and Posted by Andressen Horowitz, a US venture capital firm. It is one of the most important companies in its field, with a portfolio full of million-dollar investments in software companies, gamingfintech, cryptocurrencies and other areas related to technology.
In the document, entitled State of Crypto 2022 (“State of cryptocurrencies in 2022”) a section is dedicated to the stablecoins, cryptocurrencies whose value is tied to an underlying assetsuch as a national currency, a cryptocurrency or a good.
On page 33 of said study, it is detailed that stablecoins in circulation already exceed USD 150,000 million. For this same time last year, the total issuance of these cryptocurrencies was around USD 100,000 million, so its estimated growth in 12 months is close to 50%.
These data lead AH to a conclusion that is reflected in the very title of that section: “the growing use of stablecoins demonstrates the demand for a digital dollar.” This statement concentrates an argument that could well be used by central banks of the countries to advance in the creation of their own digital currencies, something that several of them are already specifying.
CBDC, the stablecoins of the States and central banks
The States of many countries have been interested in developing their own stable cryptocurrencies, also based on cryptography, but controlled by the Central Bank of each country. They are known as central bank digital currency (Central Bank Digital Currency or simply CBDC).
Several countries are analyzing its creation and implementation in the short term. The study presented by a firm of the weight of AH may be one more argument in favor of this idea, following the premise that “people want” or “people need” a digital currency. Today, stablecoins fulfill that role, but governments also want to be part of the game.
To cite a few examples, the United States is one of the most advanced countries in this regard, as is China, which is already testing its digital yuan. In Latin America, as CriptoNoticias has reported, Chile already has a project to create its digital peso, while Mexico and Peru are working on different ideas to have their digital currencies in the coming years.
Many people do not trust CBDCs
The big problem with CBDC is that they do not provide the privacy that stablecoins do. This is a quality of cryptocurrencies that users in Europe value, but that contradicts the regulations that the Eurozone has in place for cryptoactives such as bitcoin (BTC).
As far as people are concerned, a public consultation by the European Commission revealed that people prefer to use cash over CBDCsat least for now, because they consider that these violate their freedom and privacy.
This is not a problem with stablecoins, which are not issued by central banks and therefore do not allow these entities a detailed control of transactions. It should be clarified that this does not mean that the companies or organizations that issue them (Tether, Circle, Binance or MakerDAO, among others) are obliged to provide data to the Justice of a country if required.
More data on stablecoins, according to Andressen Horowitz
The highest historical growth in stablecoin issuance occurred in 2021. After reaching the current circulation number in early 2022, they have remained in that line throughout this year, as the graph exposed earlier in this article shows.
It is important to clarify that Andressen Horowitz’s study only considers “stablecoins that are considered fully collateralized”, whether by cryptocurrencies, fiat money or another asset. This means that algorithmic stablecoins are not taken into account for the statisticswhose issuance and parity with another asset are determined by an algorithm and smart contracts.
According to the cited study, Most used stablecoins are Tether (USDT), USD coin (USDC), Binance USD (BUSD) and to a lesser extent DAI (DAI). All of these are cryptocurrencies that have nothing to do with government entities, but with organizations or companies that are in charge of regulating and supporting their issuance and guaranteeing their parity.
Despite its remarkable growth, the supply of stablecoins is not comparable with that of the national currencies of several countries. As you can see in the graph above, its circulation is well below that of coins from Canada, Spain, Italy, France and the main world powers.