As the world became more digital during the pandemic, so did our economy. Cryptocurrency is designed for a digital economy, and the growth of ecommerce and online payments was one of the big catalysts for crypto’s recent rise.
Voyager CEO, Steve Ehrlich, said on Fox Business this week, “There will be more companies accepting crypto...and more companies will accept stablecoins as the first step before accepting Bitcoin.” (Fox Business)
Most stablecoins, such as USDC, are simply a digital version of a fiat currency, meaning there is a dollar kept in an audited bank account for each dollar circulated digitally on the blockchain. Stablecoins always maintain parity with the dollar, giving traders an easy way to take profits, merchants a way to accept crypto without the risk of volatility, and institutions a frictionless way to move large sums of money–all powered by the benefits of the blockchain.
Stablecoins also create a decentralized and institutional lending ecosystem that allows credible companies to borrow and lend stable coins. This is how Voyager currently offers 9% interest APR on USDC.
We often talk about disruption and, while stablecoins may appear on the surface to be the least disruptive asset in the crypto market, they demonstrate the ability for technology and innovators to create faster and more efficient solutions than the laggard traditional financial system.
It’s for all of these reasons that a race has begun for central banks and governments to digitize their dollar and launch their own CBDC, or central bank digital currency. Imagine how fast stimulus money could enter the economy if there was a digital dollar issued by the Fed and all citizens had a Fed wallet that could be funded near-instantaneously. From universal basic income, to serving the millions of people who are unbanked, the use cases of CBDCS are immense.
In a recent study released from PwC, more than 60 central banks are exploring and researching CBDCs (PwC CBDC Global index report), including the Bahamas, Cambodia, Ecuador and more.
This week it was announced that the Chinese government is launching a lottery for its digital yuan to do some trials in Beijing. This will be a part of its pilot program where they will distribute 40 million digital yuan ($6.3 million dollars) to test the new system. The program is quite clever, as they will distribute the money to 200,000 winners who can download a banking app and use the prizes at nearly 2,000 merchants. (CoinTelegraph)
China is not the only country actively implementing new digital programs. South Korea, through the Bank of Korea, is kicking off their digital currency experiment this summer and are looking at CBDCs “feasibility and overall effectiveness.” (DeCrypt) Indonesia is also launching their own project (CryptoBriefing), and France is utilizing the public blockchain, Tezos, to power its current CBDC stablecoin experiment. (CryptoBriefing)
On Wednesday, a news story broke that the European Central Bank warned that other countries who fail to launch their own digital currency will lose control. Although we in the crypto world know the threat cryptocurrencies can pose to central banks, their main aim was actually toward big tech. With Facebook’s Diem on the horizon, the thought is that if countries don’t move fast enough they may struggle to compete with big tech stablecoins, which could lead to even faster rising of inflation without private banks at the helm. (DeCrypt)
Will we have an Amazon, Twitter and Samsung coin in the future? We’ll have to see, but the race to digitize cash for countries and companies is most definitely on.
One concern many have around CBDCs is the ability to track and control people and their finances. If the central banks control a centralized ledger, the vice grip on financial surveillance could tighten even further.
What seems most likely to happen is that the countries who launch CBDCs early will see innovative ways to stimulate their actively recovering economies, applying more pressure on others to do the same. This will be followed by the launch of several big tech coins, creating an entirely new economy revolving around and fueled by digital currencies. All of this will have to compete with the power of decentralized cryptocurrencies, but a little healthy competition can only cause more growth for the world of digital finance. Either way, it appears that the tethers to the traditional global financial system continue to loosen in favor of a more accessible, digital future.
Top Market Movers
- Nervos Network (CKB) +33%
- Filecoin (FIL) +32%
- Kyber Network (KNC) +31%
- Monero (XMR) +24%
Polygon (MATIC) Now Available on Voyager
We are excited to announce that Polygon (MATIC) is now available for buying, trading, and transfers on the Voyager app.
Polygon was derived from the Matic network in 2020 and provides a layer-2 solution for Ethereum, maintaining the ultimate goal of optimizing scalability for the immense smart contract platform.
Learn more about Polygon on our blog.
Download the Voyager app to trade MATIC.
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Voyager Cryptocurrency Risk Disclosure
All investments involve risk and the past performance of a digital asset or other financial product does not guarantee future results or returns. Cryptocurrencies are highly speculative in nature, involve a high degree of risk and can rapidly and significantly decrease in value. It is reasonably possible for the value of Cryptocurrencies to decrease to zero or near zero. While diversification may help spread risk, it does not assure a profit or protect against loss. Investors should consider their investment objectives and risks carefully before investing. Previous gains may not be representative of the experience of other customers and are not guarantees of future performance or success.