Eh? A new kind of money is emerging
We’re used to thinking of money as something physical toonies in your pocket, bills in your wallet, hey even numbers in your bank account. But money is changing fast.
Today, there’s a new kind of digital money called stablecoins that are being used around the world and not just by not just by techies and teenage boys running those crypto exchanges out of their parent’s basements. No this new digital money is being run but by regular people, businesses, and even governments.
In some places, stablecoins are already being used to send money, get paid, shop online, and save for the future. And here in Canada, big decisions are being made about how stablecoins will fit into our economy.
But what exactly are stablecoins? How do they work? Why are they growing more popular than Bitcoin? And what does this mean for us? That’s me, you. Bitcoin I always thought was simply a digital pyramid game, you know a sucker is born every minute thing.
A stablecoin is a kind of digital money designed to stay stable in value and usually worth exactly $1.
That’s it in a nutshell.
Unlike Bitcoin which go up and down in price, no let’s say that again, unlike bitcoin which is a total sucker’s game , stablecoins are built to stay steady. They’re called “stable” because they are usually tied to something real and predictable, like the U.S. or Canadian dollar.
When you buy a $100 worth of stablecoins from an authorized dealer or company (and they need to be authorized because now we are getting serious government regulation here, unlike bitcoin which was a Wild West), that company is required to hold $100 in cash or government bonds like Canadian Treasury or US Treasury bills. All said, the company can’t just pull $100 out of thin air and say, yo here you go $100 worth of stablecoins. Whatever they sell they have to have that exact amount in a cash account or a similar financial instrument that can back up and guarantee the sale of the stablecoins.
