TL; DR
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Colombia’s largest bank, Bancolombia, has gotten into 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 launched a stablecoin called ‘COPW’, which is pegged to the Colombian peso.
That news is nice and all, but the important topic it got us thinking about is this:
Many people (on both sides of the fence!) seem to think there is only room for it or cryptocurrency or traditional finance, but there is no room for them to coexist.
We are here to tell you that this is nonsense.
Take a stablecoin like COPW for example: it literally couldn’t exist without a fiat currency to which it could be pegged.
Sure, there are other stablecoins that are pegged to the value of gold and other commodities, but ultimately their value can also fluctuate widely, making it difficult to be ‘stable’ stablecoins.
(Not to mention algorithmic stablecoins á la UST 😐)
We’re not sure that crypto will ever be the world’s dominant currency – and that’s not necessarily a bad thing.
But there is a very important place in the world for stablecoins.
For example, if your country’s fiat currency is currently experiencing hyperinflation, but you to have the ability to list it on an exchange and convert it to something like USDC; suddenly your currency will only inflate as much as the US dollar – still relatively high, but not catastrophically so.
All of this is to say, we’d love to see a company so deeply entrenched in the traditional financial space (literally a bank) enter the crypto space with the intention of introducing their users to crypto.
Kudos to you, Bancolombia.