Into the Wild

THE BAREFOOT VC \ OCTOBER 2018

A few weeks ago, I wrote about the proliferation of stablecoins, crytpocurrencies using different mechanisms to maintain a stable value versus a specific price (most often US$). The goal is to reduce volatility when utilizing decentralized applications. Many exchanges have rolled out their own stablecoins which are used in trading cryptocurrencies on their exchanges — instead of using BTC or ETH which are prone to volatility.

Tether (USDT), the first stablecoin to trade in 2015, has been in the middle of significant drama within the past few days along with Bitfinex, the exchange it is closely tied to. Questions have circulated for years on whether Tether has the US dollar reserves to back its coin, claims that have been exacerbated in recent days as Bitfinex halted fiat deposits and changed banking partners. USDT lost its peg, falling at one point to less than $0.90, before recovering as Bitfinex re-opened deposits. Meanwhile, Gemini’s stablecoin rose above $1 during the same time period.

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