Through a post on Twitter, Asheesh Birla, Senior Vice President of Product at Ripple, gave his insights on the recent announcement made by Coinbase, wherein they listed the USDC stablecoin. According to Asheesh, stablecoins are a good solution for ensuring stability in certain use cases.
He further gave the examples of long-term holdings, loan, and payment for “everyday things”. He also stated that the stablecoin platform could provide short-term utility.
Coinbase, the largest cryptocurrency exchange in the U.S, had recently announced the launch of Circle’s stable coin [USDC]. Users could buy, sell, send and receive USD Coin [USDC] on their platform.
Asheesh further spoke about the xRapid technology, which focuses on aiding financial institutions and payment providers to minimize liquidity costs while simultaneously improving their customer experience. He added xRapid could ensure such stability for cross-border payments without relying on stablecoins. He added:
“Since XRP is a bridge currency, payments are in and out of XRP within seconds.”
Asheesh also spoke about the risks involved in the stablecoin platform and stated that investors had to be cautious about stablecoins backed by a single entity. He added:
“They introduce counterparty risk and trust back into the system and could undermine the entire thesis behind blockchains and digital assets.”
Stablecoins backed by a single entity has potential risks as stablecoins are pegged to a fiat currency like the US dollar. One of the major problems is the counterparty risks that are involved as the question arises whether there is actually one US dollar in the issuer’s bank account for each stablecoin that is in circulation.
Another counterparty risk is about the banks holding the US dollars, whether these dollars are held onshore or offshore. Thus, knowing the counterparty [the bank] is instrumental in evaluating the risk involved in the stablecoin platform.
Furthermore, there is a problem of transparency and visibility as most of the stablecoin issuers do not provide information about the banks and financial institutions holding the corresponding US dollars.
The post Ripple’s xRapid could ensure stability in cross-border payments without relying on stablecoins, says Asheesh Birla appeared first on AMBCrypto.
Source: AMBcrypto
Original Post: Ripple’s xRapid could ensure stability in cross-border payments without relying on stablecoins, says Asheesh Birla
