Stablecoin: A Cryptocurrency for the Rest of Us

by Marc Mintz, CPA.CITP, CGMA, Marc Mintz & Associates, LLC | July 15, 2020

Since Bitcoin’s beginning in 2009, its value (1 BTC) relative to the U.S. dollar (USD) has fluctuated from near zero to $19,650 in December of 2017. Today, the price stands at 1 BTC to $9,237 USD, and the trading range over the last 365 days has been between $11,540 and $5,342. But though buying and selling Bitcoin is a speculative endeavor, it was the first application developed utilizing blockchain technology, which will continue to be the foundational platform for the development of digital transaction processing. Blockchain’s benefits, including security, accuracy, transparency, timeliness, cost savings and traceability, ensure a long future.

Now, enter a new category of cryptocurrency that pegs its value to a collateralized reserve asset —Stablecoin. In essence, it has all the benefits of a blockchain-based currency, but its value can be pegged to the U.S. dollar! If you conduct international financial activities, the reserve asset could be the applicable countries’ fiat currency. This effectively allows parties to hedge foreign currency risk simultaneously with the execution of each transaction. Stablecoin reserve assets could be established based on commodities with volatile prices. Gold, copper or oil Stablecoins would allow trading partners to hedge price risk as transactions are conducted.

Emerging Applications

A hypothetical development of a blockchain-based Stablecoin could involve the following: An entrepreneur creates a new company, Masvis, Inc. Their business plan is to meld the convenience of a bank’s debit card with the affinity rewards programs offered by hundreds of participating businesses that focus on small, recurring transactions. Advantages to participating businesses will be the significant reduction of paying intermediary (credit card) fees and simplifying the administration of customer loyalty programs. Consumers will no longer need to carry inconvenient loyalty cards or use individual apps for completing everyday transactions. Masvis can take a fractional percentage of transactions while attracting a large base of banking customers who seek to simplify their lives.

JP Morgan, meanwhile, has become the first U.S. bank to launch a digital token (JPM Coin) backed by fiat currency. This closed system allows payment and receipt of digital tokens between existing institutional clients. While tokens must be collateralized with U.S. dollars held in a JP Morgan account, users of this Stablecoin currency receive many of the benefits inherent in a blockchain-based system. These include the following:

  • Reduced transaction fees
  • Instantaneous transaction execution
  • A more secure environment for executing transactions
  • Better traceability

It seems inevitable that as JPM Coin is further developed, it will become more widely used by additional customers and across additional banking activities. And as Stablecoin continues to evolve, a paraphrase from Leon Trotsky’s prediction for the Mensheviks during the Russian Revolution is applicable — one day Bitcoin may be relegated to the dustbin of antiquated technologies. But for now, it’s intriguing us.


Marc D. Mintz

Marc D. Mintz

Marc D. Mintz, CPA.CITP, CGMA, is the managing member of Marc Mintz & Associates, LLC. He is a former NJCPA Trustee and a past president of the Passaic County Chapter. Marc can be reached at

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