When Bitcoin was started in 2009, there was a lot of excitement and criticism in the technological and financial world. But when its value increased a couple of years back, it gains enormous traction. Initially viewed as expertise of coders now, even bankers realize the importance of cryptocurrency. According to a member of the Board of Governors of the Federal Reserve, Lael Brainard, Fed is currently looking for issuing its digital coin as a central bank digital currency (CBDC), which shall be the backbone for a new, secure real-time payments and settlements system. This arises from the institution's desire for transforming payments as digitalization has the potential to deliver higher value and convenience at a lower cost. Hence, they are now conducting research and experimentation related to distributed ledger technologies and their potential use case for digital currencies.

This might herald a new beginning for market shift and a world that adopts disruptive technologies into their applications. As e-commerce sites have changed the way we shop and payment apps that boosted cashless transactions, the blockchain-backed digital currency might bring the next disruptive storm, kindled by the availability of appropriate technology, rising consumer demands, corporate leaders and amenable regulatory environment.

As per an article on Harvard Business Review, the main question is how to achieve this. Despite its alluring promises, issues about price volatility, the necessity to comply with the existing regulatory framework have hindered the mainstream adoption of this form of currency. The article cites a solution to these problems: stablecoins. These mediums of exchange can improve the effectiveness and reach of e-commerce.

Unlike Bitcoin, stablecoins prioritize price stability and can help prevent the situation of volatile values, which is not new in the case of cryptocurrency. One of the best examples of this is Seoul-based Terra. It is a blockchain currency with better transparency and reliable value that ordinary people use, i.e., it uses a cryptocurrency called Luna to automated monetary policy to keep its price stable, contracting the supply when prices are too low and expanding it when prices are too high. This is also how Luna receives its transaction fees in the form of a reward. There is another stablecoin by Facebook's Libra but later had to withdraw its original version due to heavy criticism from traditional financial institutes as its governance lay in the hands of certain large corporations.

While the current credit card system charges to factor in charges from intermediaries per transaction, Blockchain enables payments directly from buyer to seller, eliminating extra costs with the additional benefit of automated verification during the transaction. This can reduce the infrastructural costs of banks by a considerable margin, meaning cheaper overseas and domestic transactions at faster rates. Besides, people no longer will need to have a minimum bank balance to avail a credit card or credit account. All these can not only emerge as the new credit system but due to the higher efficiency of stablecoins, they are more likely to evolve into broader market reach and more trust due to transparency, thus become a mainstream thing in the future.

As Terra is slowly yet surely winning the e-commerce industry, experts believe that for any type of stablecoin to grow further, they need corporate champions as well as innovative outsiders. Despite Brainard's concern about Facebook's tragic Libra project, one cannot deny how its stablecoin did help in drawing attention to invest and develop this technology. Even JP Morgan has recognized the need for a digital currency for payments through JPM Coin. Jack Dorsey's Square has recently won a patent for a network allowing consumers to pay with cryptocurrency and merchants to receive the full value in U.S. dollars, eliminating any concerns about crypto volatility. Challenger banks, too, are now beginning to accept cryptocurrencies, e.g., Revolut.

"The prospect for rapid adoption of global stablecoin payment systems has intensified calls for central banks to issue digital currencies to maintain the sovereign currency as the anchor of the nation's payment systems," Brainard continued her speech at Stanford Graduate School of Business in California. So, the change in payment, e-commerce, and financial industry is coming, and it is going to be momentous. Although Bitcoin had flopped, stablecoin might be a huge hit!