Because this global crisis is a decisive moment for Stablecoins

The stablecoins emerged in 2018 with the exciting promise of being used worldwide to improve financial access and help countries afflicted by hyperinflation or cross-border payments and friction / malfunction on remittances.

In practice, they have mainly been used to protect investors from the wild volatility of the first cryptocurrency markets and arbitrage. The global crisis caused by COVID-19 is an opportunity for stablecoins to deliver on these promises, especially when governments try to quickly deliver stimulus money to large populations that desperately need it.

Although most stablecoins in use today are supported by fiat, cases such as MakerDAO and Synthetix have shown that it is possible to build stablecoins anchored to real world assets such as the US dollar, but which are guaranteed by other crypto assets in a decentralized way using smart contract.

Even in the notorious "Black Thursday", both protocols have been able to prevent the price of their stablecoin resources from weakening significantly and still continue to provide empirical evidence that it is possible to create a stable value asset entirely in software.

What time?

The COVID-19 pandemic underscores the need to transact from anywhere quickly. Sending cash transfers with large-scale bank transfers and checks can be slow and expensive and expose recipients to possible infections while trying to deposit or cash their checks.

After weeks of negotiations, the United States has partnered with Square, PayPal and Intuit to pay the small business loan portion of the incentive package. Outside the United States, especially where electronic payments are not widely available, stablecoin's promise for stimulus payments is more obvious and immediate.

The World Bank recommends governments to make transfers via smartphone to limit the amount of in-person contacts needed to receive emergency funds, but what infrastructure should they use?

Since stablecoins operate on an open infrastructure, companies can create response tools and wallet support without governments being afraid of being blocked with a single provider.

The future

For stablecoins to be viable alternatives, they must be easy to store, send and receive on an inexpensive smartphone. Solutions like Argent and Celo are working hard to make it possible. But the use cases don't stop there.

Since stablecoins are programmable, their future counterparts will change the way we think about money itself. They will allow further experimentation on incentives for spending during recessions.

Direct cash reductions and negative interest rates (or devaluation) will be possible on a much larger scale than before. And finally, people will begin to experience how money itself is created.

Just as money was backed by gold, the new stablecoins can be supported by tokenized resources that we want to see more in the world (for example, tokenized rain forests). When choosing between two stablecoins, you may soon be able to choose between, for example, helping to solve or contribute to global warming.