Future Bleak for Private Stablecoins, SFB Economist Says
SFB Technologies’ chief economist sees a future for central bank digital currencies, or CBDCs, but not for privately issued stablecoins.
Speaking on a Unitize digital conference panel, Peter Dittus, chief economist for SFB Technologies, said he does see a place for privately-issued stablecoins.
“I don’t see a great future,” Dittus said of stablecoins on the June 7 panel, live streamed by Cointelegraph.
Two stablecoin classifications exist
Stablecoins exist in two categories — privately issued and CBDCs, according to Dittus. Issued by governments, CBDCs essentially turn paper cash digital, with each coin representing the value of the nation’s currency to some degree.
Privately issued stablecoins also often hold to the value of various national currencies, although private entities run these assets, not governments. Tether’s USDT is one example of a privately issued stablecoin.
“If you have a stablecoin issued by a private company, I’m not sure what the point of this is,” Dittus said. “There may be a question of internet of things, a sort of small payments kind of stuff, that I can see, but otherwise, why would you use it,” he added, noting the presence of all the other digital payment forms available. PayPal and Venmo exist as two such examples.
“What’s the unique selling position of a stablecoin that’s issued by a private consortium?” Dittus added. He did, however, mention potential for assets native to certain platforms, such as Facebook or Telegram, that harness those entities’ massive customer bases.
Dittus sees value in CBDCs
Although he did not express enthusiasm toward privately issued stablecoins, Dittus does see promise for stablecoins issued by central banks. “That obviously has significant potential because it has all the support and the legal power and the economic power of a coutnry behind it,” he said.
“From a point of view of someone who holds it, it’s a credit risk-free asset,” he added.
Dittus also mentioned interest around a different type of stablecoin for nations torn by inflation, such as Argentina, which would base its value on other assets such as precious metals or goods instead of currency.
“If you have a stablecoin that is linked to the bolivar, who would be interested in that,” Dittus said, referring to Venezuela’s paper currency. Venezuela has seen soaring inflation over the last few years, reaching 10,000,000% in 2019.
