Apr 25, 2023

Programmable Money: Stable Assets Outperform CBDCs

The financial system as we know it is changing. With the emergence of crypto assets, stablecoins and central bank digital currencies (CBDCs), the way we use money is becoming more and more programmable. Programmability is a key element to the success of web3 and the development of NFTs, and it is allowing for asset backing and decentralization that was previously not possible.

Stablecoins are being used for a variety of use cases, such as reducing the cost of traditional financial activity, protecting income from hyperinflation, and providing more privacy-oriented payments. While CBDCs could theoretically solve some of these problems, stablecoins have the potential to go beyond traditional finance.

One way that stablecoins can go beyond what CBDCs can offer is through asset-backing with utility assets. These assets can include novel real-world assets such as tokenized land assets, food forests, and other real-world assets from local regions. This could lead to the creation of community stablecoins that link those assets to the broader financial system.

Decentralization is also a key factor in the success of stablecoins. Decentralization allows for programmability, transparency, and the development of new features that are driven by the needs of the users. This could lead to the creation of stablecoins that have features such as universal basic income, or that are used to incentivize environmental conservation.

The crypto industry has the potential to design more novel functions through asset-backing and decentralization. However, the lack of regulatory clarity in the United States has been a key challenge, and new stable asset issuance may only become more difficult. For this reason, innovation may have to happen abroad.

If stablecoins are to reach their full potential, the focus must be on encouraging innovation and bringing real-world use of blockchain technology to the forefront. Asset-backing and decentralization are two fundamental pillars to hone in on this work, and together they can help create a new way of building novel tools with programmable money.

Disclaimer: All investment or financial opinions expressed by MoonLanding Media are not recommendations and are intended for entertainment purposes only. Do your own research prior to making any kind of investment. This article has been generated based on trending topics, has not been fact checked and may contain incorrect information. Please verify all information before relying on it.