The official X account of Ripple cryptocurrency giant has published a short video that is part of the “Crypto In One Minute” series. The company’s president Monica Long took part in it, explaining to the crypto community what stablecoins are.
This video was released after Ripple had announced the beginning of closed beta testing for its stablecoin Ripple USD (RLUSD).
Ripple begins to test RLUSD
While talking about stablecoins, the Ripple president described them as tokens on a blockchain that represent some kind of real-world currency, and there is a one-to-one peg between a stablecoin and the currency that backs it. In this part of the video, she referred to the U.S. dollar as a “very popular version of a stablecoin.”
We’ve got stablecoins on the mind today…@monicalongsf is back in the hot seat with the latest #CryptoInOneMinute answering the question “What is a stablecoin?” pic.twitter.com/8WkaFq6S7a
— Ripple (@Ripple) August 9, 2024
Earlier this week, the beta testing of RLUSD was announced. As part of it, the stablecoin cannot be bought or sold yet. It will be tested by a selected group of Ripple’s corporate partners.
When Ripple is granted final permission from regulators, it will launch its stablecoin not only on XRP Ledger and Ethereum but also on other blockchains.
Are stablecoins really stable?
The most popular stablecoins on the market at the moment are Tether’s USDT and Circle’s USDC, both backed by U.S. dollars. Tether also has U.S. Treasuries to back its stablecoin. However, last year, in March, USDC experienced a brief depeg from the dollar when three major U.S. banks — Silicon Valley Bank, Signature Bank and Silvergate Bank — collapsed as a result of a banking crisis that occurred last year. Until recently, USDT also was a subject of scrutiny as regulators and many crypto companies had doubts about whether Tether has enough USD reserves to back all the USDT they issue quickly and frequently on a number of blockchains.
Many crypto holders do not trust stablecoins due to their overall distrust of the fiat financial system (with the U.S. dollar as the supreme player) and, pointing out to the fast-growing U.S. national debt (equaling $35 trillion by now), prefer to hold their funds in Bitcoin and other cryptocurrencies.
Many saw their distrust increase after in May 2022, the algorithmic UST stablecoin created by the Terra blockchain crashed, losing its $1 peg and causing a significant drawdown of the crypto market and the Bitcoin price.
