When Apple brought out the iPad, nobody really understood what it was for. Yet Apple revealed on October 30 that it has sold 400 million of the halfway houses, overtaking sales of HP and Lenovo computers over the last year.
Historically, creators of coins have made millions, or in some cases, billions by mining early and then waiting until the coin price is high before selling. Satoshi, if he is still alive, is estimated to own 980,000 Bitcoin putting him/her/it in the top 50 of the world’s wealthiest people. Charlie Lee sold his Litecoin near its all-time-high. Even Jed McCaleb was forced to become a billionaire because he was sued by Ripple to not sell his XRP. While this isn’t arguably the most ethical way to make money, many coin creators purposefully hold back large supplies of coins as a quick way to mega-wealth. But if a stablecoin does reach the moon, something has gone seriously wrong–so how do the founders make money?
In short, they don’t. Nevin Freeman,
Stablecoins, according to Ben Dives, CEO of the London Block Exchange, bring added value to the company that issues them and helps raise awareness of other, more lucrative products the company might be trying to sell. They’re basically a lure to attract passing trade.
Todd Clyde, COO of Token, a financial compliance company with its own stablecoin, says when his company started out, they received initial support from venture capitalists because of the income they could make by acting as a cross-border payments service. By charging lower fees than regular banks do for moving fiat cash, and speeding the whole process up, Token profits. That money is then used to cement its image as a bulwark for keeping your crypto safe from volatile coins. Clever. But stablecoins have other tricks up their sleeves, too.
“The value’s not in the coin, the value’s in the company. We raise money from traditional venture capitalists. The upside for them is we’re reinventing payments through open banking and digital currency providing the end-to-end solution.”Todd Clyde, COO of Token.
Huobi, an exchange, believes its stablecoin will bring more users to its exchange so it can profit from trading fees. Daniel
Market makers, individuals and/or groups who inject liquidity into a marketplace to keep prices stable get paid, too. Mitchell Dong, managing director at Pythagoras Investment, says: “We are being offered financial incentives both from the stablecoin issuers as well as the exchanges. To get distribution, they’re paying market makers to distribute.”
So, why are there so many stablecoins? Because, dear boy, there’s money up in them secure hills.