Deposit tokens fulfill all the functions of stablecoins very well. This is why JPMorgan argues that these could very well become the most important tokens in the cryptocurrency market. Find out how deposit tokens pose a threat to stablecoins.
Why deposit tokens?
A new study of the blockchain unit made by JPMorgan signals the appearance of a future cryptocurrency that could threaten the existence of stablecoins. This would be backed by an institution and known as deposit tokens. The report of this survey states that these tokens could become more popular than stablecoins.
The volatility of cryptos such as bitcoin and ether has caused traders to turn to stablecoins. In fact, their goal was to place their holdings in a stable asset, while taking advantage of cross-border payments.
Notwithstanding the prowess of these tokens, their weaknesses were quickly discovered. Reason why there was talk of thinking about a new form of crypto. Hence the advent of deposit tokens which cover the same uses as stablecoins. However, their advantage lies in the fact that they have a blockchain-based coin that is fully integrated with the traditional banking system.
A project still under study
It is important to note that these deposit tokens are still just a concept. Despite this, a study states that these could be issued by banks. Moreover, they would represent commercial bank cash, but in a virtual form. Thus, their uses would be expanded.
Indeed, the form of deposit tokens will allow new functionalities. These include, for example, programmability and instantaneous and atomic settlement. As a result, transactions will become faster and payment operations will be more sophisticated.
So you can understand how deposit tokens pose a real threat to stablecoins. It should further be noted that these will ameliorate some setbacks regarding stablecoins. So too are the challenges of tackling the multitude of transactions driven by increased institutional adoption.
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