The Future Of Stablecoins: What Will We See Next?

A lot of discussions about cryptocurrency tend to revolve around future trends. Potential price movements for the leading cryptos are debated constantly, for instance, and we looked at some bitcoin trends more broadly back in December (highlighting various predictions for price and market cap). One trend that is already gaining steam fairly rapidly though — and which still doesn’t generate enough attention — is the emergence of stablecoins.

By definition, a stablecoin is a cryptocurrency that is backed by another asset that is perceived to be stable. The idea is simple: Whereas something like bitcoin is inherently independent and thus somewhat unpredictable in its movements, a stablecoin tied to something steadier (like a major world currency) is more dependable. It offers some of the convenience, security, and trading flexibility of a cryptocurrency, without the volatility — at least in theory.

Right now, we’re seeing examples of prominent stablecoins coming from both banks and companies. The most noteworthy example may be the forthcoming Libra coin from Facebook, which will be banked essentially by a variety of investment partners. However, Libra isn’t alone. Recently, a digital Swiss franc created by Sygnum Bank in Switzerland, and banks in the U.S. and China are poised to make similar moves.

So, with the idea of stablecoins having caught on fairly quickly, it’s worth asking what we might see next. And while we can’t answer that question with certainty, there are a few possibilities that make a lot of sense.

Commodity-Backed Cryptos

Tying a cryptocurrency to the value of a more established commodity makes a great deal of sense if a stablecoin market is to develop. And there is actually already some talk of a potential development of this sort coming out of Russia. It’s rumored to be called Neft-Coin, and would be backed by oil, which is a relatively consistent and thoroughly trusted asset. Plus500’s overview of oil as a commodity points out that it is in fact the most traded commodity in the world, and also reveals that over 85% of traders are buying rather than selling (at least as of the time of this writing). Launching a crypto backed by a commodity like this — or, similarly, gold or silver — would provide exactly the sort of stability at the core of the stablecoin concept.

Privately Funded Stablecoins

This isn’t as specific an idea. However, just as we see individuals and small groups launching new cryptocurrencies (seemingly on a daily basis at times), we’re likely to see some smaller, privately funded stablecoins as well. If the existing crypto market has taught us anything, it’s that a new asset can emerge based on a fairly small distinction with regard to its competitors. So, in theory, anyone with the know-how to launch a new crypto asset and the funding to back it could unleash a new stablecoin, likely with some minor innovation that makes it original.

Libra Alternatives From Other Tech Giants

If Facebook’s Libra proves to be a success, it seems virtually certain that other tech giants would follow suit. Twitter is the first that comes to mind, though that particular option seems unlikely. Two years ago, Fortune wrote about Twitter’s ban on cryptocurrency ads, indicating a certain distaste for digital assets; since then, Twitter CEO Jack Dorsey (who is himself a noted believe in bitcoin) has flatly rejected the idea of imitating Libra. However, there are plenty more tech giants that may well see fit to follow in Facebook’s footsteps, from Amazon, to Apple, to Alibaba and Tencent.

Time will tell how the stablecoin market continues to develop. At this point though, we’d be surprised if there isn’t activity in all three of the areas listed above within the next year or so.