Coinbase and Circle forms a joint venture to boost adoption of dollar-backed cryptocurrencies
In a bid to establish more ground rules in the quickly evolving asset class, Two of the largest cryptocurrency companies, Circle and Coinbase announced that they would be joining forces.
On Tuesday, October 23rd, a joint venture known as the “CENTRE Consortium” was unveiled by both Start-ups.
Both cryptocurrency companies stated the aim through this new joint venture is to quicken the adoption of cryptocurrencies supported by actual government currencies such as the U.S. dollar.
In a news release dated Tuesday, October 23r, Circle co-founders Sean Neville and Jeremy Allaire said, “Coinbase and Circle share a common vision of an open global financial system built on crypto rails and blockchain infrastructure, and realizing this vision requires industry leaders to collaborate to build interoperable protocols and standards.”
Back in May “stablecoin” was launched by Circle, the company’s version of a U.S. dollar.
In its most recent funding round, a series of announcements and deals have been made by the Fintech company, valued at $3 billion, this is in spite of the long-term bet that regardless of bitcoin’s price slump, the crypto economy will withstand all odds.
Reportedly, one of those bets was The “USD Coin” which is trading on Coinbase’s popular cryptocurrency exchange as of Tuesday.
Notably, this is the very first instance when a stablecoin is being supported by Coinbase, a coin which is “fundamentally different” from other cryptocurrencies according to the Fintech start-up.
Since its early rise to almost $20,000 back in the previous year, Bitcoin’s price has gone on to display wild fluctuations, due to which many experts have said that it could not be considered as a viable payment alternative.
On the other hand, A stablecoin similar to Circle’s USD Coin is meant to represent a single U.S. dollar. It represents a 1:1 of the greenback, that has recently been built on the ethereum blockchain. According to Circle, every single USD Coin is collateralized by a corresponding U.S. dollar, held in accounts subject to timely public reporting of reserves.
In a blog post published by Coinbase, it said, “The advantage of a blockchain-based digital dollar – like USDC – is that it is easier to program, use in apps, store and send, locally in comparison to traditional US dollars. Thus, we see USDC as a major step towards a more open financial system.”
However, other Stablecoins have shown some characteristics which make them far from stable. One such instance was seen during the first week of October when the price of Tether, which is also reportedly linked to the U.S. dollar, plummeted below 90 cents following reports displaying that the cryptocurrency exchange from Hong Kong was insolvent. As a result of which Critics of Tether have raised questions asking if that cryptocurrency is actually backed by the equivalent amount of U.S. dollars.
Significantly multiple long term bets regarding the future of cryptocurrency have been made by Circle CEO Jeremy Allaire however, even he has said that he is not so sure that investments or trades in the future crypto economy will be conducted through bitcoin. In a recent segment with CNBC, he even went on to say that investors would continue to depend on government-backed money , it should only continue to carry out its operations on the same blockchain technology.
Allaire went on to explain, “By no means is Circle’s USD Coin meant to replace the U.S. dollar, rather it provides a solution to take an existing dollar and make it compatible with the cryptocurrency infrastructure, which according to several advocates is ‘faster and better’ than existing payment rails.”
Back in October, at the Security Token Academy conference in Manhattan , Allaire said, “It would be pretty dramatic if individuals could exchange value over the internet without a toll extracted for payments.”
“Comparatively speaking, it would display the wen as a cute experiment in the next 10 to 15 years.”