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October 5, 2022
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Brian Armstrong says that fiat-linked stablecoins are not stable

Brian Armstrong and stablecoin anchored in “purchasing power”.

Coinbase CEO Brian Armstrong says that fiat-linked stablecoins are not stable, Armstrong raised the issue of fiat-linked stablecoins on Twitter, describing them as inflationary and therefore unstable currencies.

Through his tweet, he asks the interested community for new ideas on how to create a new concept of stablecoin , understood as truly stable.

Answering Armstrong’s question, among many others, is a tweet from Yoni Assia , founder and CEO of trading platform eToro.

“If fiduciary-backed stablecoins really do become inflation currencies (not so stable), then how are we going to get a currency that is truly stable? Maybe something that tracks a real-world basket of goods (purchasing power parity) using oracles? Welcome ideas”.

“BigMac Currency!”

The CEO of Coinbase, in addition to raising the issue of the stability of stablecoins pegged to fiat, invites the community to consider whether this could be linked to the purchasing power of a basket of real-world assets.

Assia from eToro, perhaps ironically or perhaps not, responds with “BigMac Coin”, thus proposing a new idea of ​​stablecoin linked to a basket of goods that could be hamburgers.

According to this new concept of stability, the current idea of ​​stablecoin linked to fiat, which proposes the same inflationary problems as legal tender, would no longer exist, and a new stability solution based on the purchasing power of a basket of assets.

Jack Dorsey and Michael Saylor: Bitcoin as a stablecoin solution

Jack Dorsey , the CEO of Twitter and Michael Saylor , CEO of Micro Strategy also answered the question, supporting the idea that the solution of “stability” is in Bitcoin (BTC) , although in a different way:

“Bitcoin fixes this”.

“As consumers lose faith in their local currency as a medium of exchange, they convert their working capital into stable currencies –in US dollars. As they lose faith in money and credit as a store of value, they will convert their savings into BTC. #Bitcoin is the solution to preserving wealth”.

Armstrong: Bitcoin is not stablecoin because it is deflationary

And although fiat coins do not qualify as stablecoins “stable” because of inflation, Bitcoin (BTC) would not do it either because it is deflationary.

That, at least, is what Armstrong claims in his response to the tweets about the primary currency:

“Bitcoin is deflationary, which is also very important. But that’s not the same as having fixed prices – which is useful for long-term contracts, trading pairs, etc.

Do you think Bitcoin will eventually stabilize in terms of purchasing power? ”

“Given that the amount of Bitcoin is finite and the population/economy will continue to grow, it seems unlikely.”

This isn’t the first time Armstrong has dealt with crypto threads directly with the Twitter community. Last month, the CEO of Coinbase expressed his opinion on the infrastructure bill in the United States.

Source: cryptonomist

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