With the value of cryptocurrencies fluctuating on an almost daily basis, there has been an increased focus on creating a cryptoasset which can be transferred digitally but also crucially benefits from stability and trust. Such an asset is known in the industry as a “stablecoin”, and over recent months, this latest innovation has seen a significant growth in adoption.

A stablecoin is generally understood to be a cryptoasset pegged in value to fiat currency or other assets. It is designed to avoid the volatility inherent in other cryptocurrencies whose price is entirely market driven. While the price fluctuations of other cryptoassets make them perhaps more attractive for speculation, the relative stability of stablecoins offers the possibility of cryptocurrencies being adopted for use in everyday transactions and of becoming a digital form of cash. This would allow a much wider pool of users access to the benefits of digital currencies, for example greater speed and certainty of settlement across a blockchain. In this way, stablecoins offer a bridge between the traditional financial markets and the emerging opportunities offered by cryptocurrency technology.

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