The digital money race

Written by Keith Bear a fellow at the Centre for Alternative Finance, Judge Business School, University of Cambridge.

The digital money landscape

Since the birth of Bitcoin and its vision of censor-ship free digital cash, the universe of different forms of digital money has been slowly but surely evolving. As we know, the formal definition of money has 3 criteria:

·      a unit of account

·      a store of value

·      a medium of exchange.

Whilst many argue as to whether Bitcoin (or more broadly, cryptoassets) meet these criteria, the latest forms of digital money clearly do. Let’s look at these briefly in turn.

The different forms of digital money

·      stablecoins

Stablecoins burst into the digital world with the initial launch of BitUSD and NuBits in 2014, backed by cryptoassets rather than fiat, and were quickly followed by Tether (USDC), a fiat-backed stablecoin which has grown to be the largest stablecoin in terms of market cap ($84bn at the time of writing). This was followed by the launch by Circle of USDC in 2018, currently 2^nd largest with some $26Bn marketcap. There are many other stablecoins of…