Asher Tan, the co-founder of Australia-based digital asset exchange, CoinJar, recently commented on the increasing number of stablecoins being released into the cryptoasset market.

Many Potential Use Cases For Stablecoins

Tan, who launched CoinJar in 2013 with the help of computer scientist, Ryan Zhou, remarked:

The interesting thing right now, what's on everyone's lips … [are] stablecoins … It's a craze right now … It helps you transfer money around the crypto ecosystem at a stable rate. But there's a whole lot of applications or use-cases that could come out of it.

Asher Tan

Although the concept behind stablecoins is not new – as the world’s most dominant stablecoin, Tether (USDT), was introduced in January 2012 through a whitepaper, Tan noted that it’s only recently that software engineers, economists, and investors are taking more interest them.

Tan also explained that there are several approaches companies have taken to develop stablecoins. The most common approach is to issue a certain number of stablecoins and storing the equivalent in USD, or sometimes Euros, in a company bank account.

Experienced Finance Professionals Getting Involved

According to Tan, Japanese banks call this method of issuing stablecoins the “collateralized approach” or the “custody model.” However, there are also a number of ongoing projects that are trying to develop stablecoins in a more sophisticated and decentralized manner, Tan revealed.

Commenting on the active involvement of crypto industry participants in the development of USD-pegged digital coins, Tan said:

How do you keep a peg? These are things that usually only a central bank would have thought about five years ago, and now you've got tech start-ups looking at economics, and how can you peg a currency to a token. It's fascinating.

Asher Tan

He added that in London there are many finance professionals “with 10, 20 years of forex experience” who are seriously looking into stablecoin projects. Similar to how the cryptocurrency market has begun to attract more institutional investors, Tan said “a lot of people from traditional financial circles [are interested in stablecoins] … because it’s intriguing, there’s a lot of upside to it.”

Medium of Exchange Or Store of Value?

Reflecting on the gradual growth and adoption of bitcoin (BTC) and other cryptocurrencies over the past 10 years since they were introduced, Tan observed that “bitcoin went from ‘hey let’s muck around with this’ to ‘hey this is valuable’, and that changed perceptions.”

He also pointed out that the crypto industry has “reacted in several ways. There’s a store-of-value camp, there’s a medium-of-exchange camp – but these are all metaphors of how we use something now. It’s all unfolding very quickly, and if you use a metaphor from the current day to describe something in the future, it’s not always going to work.”

As CryptoGlobe reported in October, the Novatti Group, an Australian firm, announced that it would be launching its own stablecoin – which may be used to make remittance payments and for other everyday transactions.