To make cryptocurrencies more adoptable, banks have decided to create their own tokens or “stablecoins.” Recently Russia’s biggest bank, Sberbank, decided to launch its own stablecoin just after the president of Russia Vladimir Putin signed the DFA bill into law, giving cryptocurrencies a legal status there.
Stablecoins are tightened to the national currencies, thus becoming less volatile and stable, enabling cryptocurrencies to be used in daily payments as a form of cash. There are two main differences between these stablecoins created by banks and bitcoin:
1. Banks offer their stablecoins only to their customers
2. Companies control and manage the exchange of the coins using a private company-operated “permissioned” blockchain, while Bitcoin transactions occur on a public blockchain that allows anyone to participate in validating transactions and gaining bitcoins in the process.
The two main reasons why banks are jumping into cryptocurrency services are faster transactions and lower fees. The payment processor in the traditional way of processing money takes a long time, and cryptocurrency payment technology can eliminate bottlenecks such as third party agencies or intermediaries. Since financial experts now endorse blockchain technology, there is a chance that regulators will be more comfortable also, making things easier for cryptocurrencies and blockchain to expand.