When it was first envisioned over a decade back, Bitcoin was supposed to be a decentralized alternative to fiat currencies to transform existing financial systems. Much of that has changed along the way, with many of the top cryptocurrencies now serving as holdings for risk-averse investors.
However, enthusiasts are trying to develop the usability of Bitcoin as a payment channel, with support from Layer 2 like the Lightning Network. But Charles Cascarilla, CEO of stablecoin issuer Paxos, believes it is unlikely to make a difference to Bitcoin’s use cases.
Currency or property?
In one recent interview Speaking to CNBC, the executive suggested that dollars or fiat are what people really want to pay for while holding digital assets like Bitcoin and Doge because of their upside potential. He say,
“Do people want to use Bitcoin and Dogecoin to buy things? I’m not so sure, I think a lot of it has to do with owning an asset that goes up in value… nowadays it’s not really money, dollars are money. ”
He further argues that “money is a product, and it doesn’t evolve fast enough with the way our lives change.” This is why an increase in the use of stablecoins has been noted in the past as their value is pegged to the dollar or other fiat currencies.
This is the feature that makes stablecoins optimal for making payments, Cascarilla noted. He predicts that the current year will be the year when this niche will be regulated, allowing stablecoins to be used for daily payments.
However, it should be noted that Paxos is in fact a centralized issuer of stablecoins and its co-founder therefore has more faith in the ecosystem.
Stablecoin price increase
However, the stablecoin market capitalization has grown by more than 400% in the past year and is currently at around $173 million. Paxos accounts for only 0.6% of the total, having issued just 1 billion tokens. Meanwhile, USDTether holds 45% of the market, with over 14.4 billion coins in circulation.
Tether’s success has also put it on the radar of financial watchdogs in the US. For example, SEC Director Gary Gensler has repeatedly likened the asset class to poker chips while expressing his intention to limit its growth. It could be the catalyst to implement strict regulations in this area, as predicted by Cascarilla.