As their adoption continues to increase, stablecoins are at the center of the debate over the crypto space.
Sean Stein, a professor and entrepreneur, recently highlighted in a Forbes article that “stablecoins, which are (supposedly) more mundane versions of cryptocurrency, are increasingly being adopted. But this point of view did little to impress critics. Apparently, not everyone is a stablecoin fan.
Stablecoins like Tether are suspicious, economist says
Gary Gorton, an economist at the Yale School of Management, has long been involved in examining flaws in the financial ecosystem, paying particular attention to the factors that played a role in the financial crisis that took place between 2008 and 2009. Stablecoins also make their way into the list of suspicious assets Gorton has been dealing with for a long time.
Gorton does not believe in the blockchain’s ability to ensure stablecoins have any reliable column that supports them. Stablecoins are often paired with fiat, commodities traded on an exchange, or other cryptocurrencies.
They are designed to minimize market volatility, but Gorton questions their stability. Gorton had previously branded Stablecoins as wild cat banking. Wildcat banking was basically the issuance of fiat currencies in the United States, run by poor state-owned banks.
Stablecoins are like a ticking time bomb, from Gorton’s point of view
Gorton, like other Stablecoin critics, is not interested in the current performance of stablecoins. The bigger question is whether there is substantial support. Gorton continues to warn that the future of stablecoins is bleak.
“I don’t think they will work as it is now,” he said in a speech at Princeton University. He had made emphasis.