Cryptocurrency: The Power of Programmability with Stable Assets

On April 25th, Cointelgraph reported that in providing stable value, stable currency and Central Bank Digital Currency (CBDC) seem to be two sides of the same coin. However, encrypted stable assets can provide completely different use cases, and CBDC cannot compete with them at all. The key is programmability, as smart contracts can automate and add new features to currencies. Programmability allows for asset support and decentralization, which is not possible in current CBDC design. Developers should leverage the programmable opportunities provided by stable assets, rather than attempting to compete with CBDC.

Viewpoint: Compared to CBDC, the key advantage of stable currency lies in its programmability

Introduction

On April 25th, a well-known publication, Cointelgraph, published an article that highlights the fundamental differences between stable currency, Central Bank Digital Currency (CBDC), and encrypted stable assets. The article stated that while CBDC and stable currency are two sides of the same coin, encrypted stable assets offer entirely different use cases that CBDC cannot compete with. The secret ingredient that sets encrypted stable assets apart is programmability. By harnessing the power of smart contracts, encrypted stable assets can automate and add new features to currencies. This programmability is key to enabling asset support and decentralization, two attributes currently missing from CBDC designs. In this article, we’ll explore why developers should focus on leveraging the programmable opportunities provided by stable assets rather than attempting to compete with CBDC.

The Value of Stable Currency

Before diving into the differences between stable currency, CBDC, and encrypted stable assets, it’s essential to understand the value of stable currency. A stable currency is one that maintains a constant value relative to another commodity, typically fiat currency. Stable currency is useful for businesses and individuals as it removes the volatility typically associated with cryptocurrencies such as Bitcoin or Ethereum.
Stable currency has been around for quite some time and is often pegged to the US dollar. A popular example of stable currency is Tether (USDT), which has a market cap of over $43 billion. The success of stable currency lies in its ability to provide price stability without requiring users to part with their existing currency. That said, stable currency has its limitations, such as scalability issues and centralized control that make it difficult to achieve complete decentralization.

The Rise of Central Bank Digital Currency (CBDC)

The emergence of CBDC came as no surprise as governments worldwide aimed to address the inefficiencies of paper money. The goal of CBDC was to provide users with a digital version of their paper currency, thereby enhancing financial inclusion, promoting monetary policy implementation, and boosting payment system efficiency.
Currently, CBDC is being explored by several countries such as China, Sweden, and Singapore. However, their design and implementation constraints limit their programmable functions, asset support, and decentralization.

Encrypted Stable Assets: An Alternative to CBDC

Encrypted stable assets are another type of stable currency that provide programmable functions beyond price stability. They are built on blockchain technology and use smart contracts to automate various functions such as asset lending, borrowing, and investment.
One of the most significant advantages of encrypted stable assets is their ability to support digital assets other than their base currency. For example, Tether (USDT) recently launched a platform that allows users to move their existing digital assets onto a blockchain-based platform, making it possible to leverage DeFi (Decentralized Finance) products.
Another significant advantage of encrypted stable assets over CBDC is their decentralized nature. While CBDC is under the control of central authorities, encrypted stable assets are decentralized, allowing for transparency and open access to all users. This decentralization opens up a whole new world of use cases, such as creating autonomous organizations, decentralized exchanges, and peer-to-peer lending platforms.

Leverage Programmable Opportunities Provided by Stable Assets

As mentioned, the key to encrypted stable asset success lies in programmability. Programmability allows developers to automate a wide range of functions, from lending and borrowing to investments and even goverance. By harnessing the power of smart contracts, developers can create a world of possibilities for stable currency while mitigating the risks present in CBDCs.
Developers should, therefore, focus on leveraging the programmable opportunities provided by stable assets rather than attempting to compete with CBDC. By doing so, they can promote financial inclusion, promote transparency, and create a world of open finance that benefits everyone.

Conclusion

While CBDCs and stable currency are essential in today’s financial world, they have their limitations, mainly when it comes to programmability, decentralized control, and asset support. On the other hand, encrypted stable assets provide a world of possibilities, thanks to their programmable nature and decentralization. Developers should leverage the programmable opportunities provided by stable assets and avoid competing with CBDC, thereby promoting financial inclusion, transparency, and open finance.

FAQs

Q1: What is a stable asset?

A: A stable asset is a cryptocurrency that is pegged to the value of another commodity, typically fiat currency, to provide users with price stability.

Q2: How are encrypted stable assets different from stable currency?

A: Encrypted stable assets offer programmable functions beyond price stability, while stable currency provides only price stability.

Q3: Why is programmability essential in stable assets?

A: Programmability allows developers to automate various functions, from lending and borrowing to investment and governance, thereby promoting transparency, financial inclusion, and open finance.