Why Stablecoins Are So Important

TL;DR

• Colombia’s largest bank, Bancolombia, has entered the crypto business by launching a crypto exchange and a stablecoin, which got us thinking about the value of stablecoins.

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Colombia’s largest bank, Bancolombia, has entered the crypto business by launching a crypto exchange called Wenia.

At the same time, they’ve launched a stablecoin called ‘COPW,’ which is pegged to the Colombian peso.

That news is cool and all, but the important topic it got us thinking about is this:

Lots of people (on both sides of the fence!) seem to think that there’s only room for either crypto or traditional finance, but no room for them to co-exist.

We’re here to tell you that’s bullsh*t.

Take a stablecoin like COPW for example - it literally couldn’t exist without having a fiat currency to be pegged to.

Sure, there are other stablecoins that are pegged to the value of gold and other commodities, but in the end the value of those can fluctuate greatly too, making them difficult to be ‘stable’ stablecoins.

(Not to mention algorithmic stablecoins á la UST 😐)

We’re not sure that crypto will ever be the dominant currency of the world - and that’s not necessarily a bad thing.

But there’s a very important place in the world for stablecoins.

For example, if your country’s fiat currency is experiencing hyperinflation right now, but you have the opportunity to put it on an exchange and convert it for something like USDC; suddenly your currency will only inflate as much as US Dollars inflate - still relatively high, but not catastrophic.

All of this is to say that we love to see a company which is so deeply engrained in the traditional finance space (literally a bank) move into the crypto space with the view to onboard their users into crypto.

Kudos to you, Bancolombia.