- Reckless Review, tweeted out his opinion that the success of Stablecoins depends entirely on Bitcoin.
- The Bitcoinist also went on to state that unregulated Stablecoins can’t exist without the support of Bitcoin.
- Bitcoin is what keeps the market perception of digital currencies alive and losing it would cause the industry to be crippled hard since it is still in its infancy.
Udi Wertheimer, the host of toxic Bitcoin maximalism podcast, Reckless Review, tweeted out his opinion that the success of Stablecoins depends entirely on Bitcoin. He explicitly stated that Stablecoins were a “Bitcoin” based innovation rather than a “Blockchain” based innovation.
Wertheimer went on to call the chain part of Stablecoins “superficial”, and the actual functionality of Stablecoins arises from being able to trade it for BTC. The Bitcoinist also went on to state that unregulated Stablecoins can’t exist without the support of Bitcoin.
He also mentioned that Bitcoin acts as a regulatory shield posing as the largest cryptocurrency and keeping the index against which other Stablecoins can peg, alive.
“Stablecoins” are a bitcoin-based innovation, not a “blockchain” innovation.
The chain part is superficial and doesn’t actually matter (and likely to be optimized away if stablecoins survive). But the *utility* in stablecoins comes from the fact that you can trade them for BTC
— Udi Wertheimer (@udiWertheimer) January 26, 2020
For the most part, Wertheimer has a point in his opinions. Stablecoins are, by definition, cryptocurrencies that minimize the traditional volatility of digital currencies by holding their value relative to another “stable” asset or several “stable” assets.
This stability can derive from holding value against another cryptocurrency, fiat currency, or any other exchange-traded commodity. Therefore, without Bitcoin being the face of cryptocurrencies and holding up the industry, Stablecoins lose their value.
Bitcoin is what keeps the market perception of digital currencies alive and losing it would cause the industry to be crippled hard since it is still in its infancy.
But this isn’t necessarily the case since Stablecoins can also exist without being backed by Bitcoin. A famous yet controversial example is the Tether that is supported by the US dollar and holds 96% of the Stablecoin market share.
Another well-known example that caused waves in the market was Libra, a Stablecoin array from Facebook that planned on introducing Stablecoins under the Libra branding that would be backed by various fiat currencies.
These are all examples of Stablecoins that have had significant effects on the Bitcoin and cryptocurrency market without directly being supported by Bitcoin. Therefore the value in Stablecoins is objectively not wholly based in Bitcoin as Wertheimer concludes.