While the number of cryptocurrencies has exploded in the last few years, so too has skepticism about many of them. Companies like Microsoft, Google, and Facebook have all decided to ban ads for these digital currencies — and a big reason for that is concerns about possible scams, bad actors, and a general lack of adult supervision in the field. Wouldn’t it be good if we could have a financial name we could trust in the cryptocurrency mix?
If that’s the way you think, you may well be pleased to hear that Circle, a payment startup backed by none other than multinational investment banking leviathan Goldman Sachs. While not created directly by Goldman Sachs, the fact that it is one of the investors in the Circle USD Coin gives it a seal of approval from big finance that’s lacking in many of the other cryptocurrencies on the market.
Unlike a lot of other cryptocurrencies, Circle is tied to the U.S. dollar. People owning the cryptocurrency must own one dollar for each Circle USD Coin they have — with the hook being that, essentially, this is a U.S. dollar that operates on blockchain technology.
“A price-stable currency, such as a token pegged to the U.S. dollar, is critical for enabling mainstream adoption of blockchain technology for payments, as well as for supporting maturation in financial contracts built on smart contract platforms, such as tokenized securities, loans, and property,” a press release for the new currency notes. “There are several interesting approaches to solving this need, spanning algorithmic reimaginations of money supply to crypto-backed tokens to fiat asset-backed tokens.”
This does take out some of the thrill of cryptocurrency, which is at least partially rooted in the massive fluctuations in value that saw a single bitcoin rise from virtually nothing to more than $10,000 in less than a decade. In some ways, it’s more like a Venmo-type service that gives you an alternative to using your regular credit or debit card for purchases. But it’s still an important step in the maturation of cryptocurrencies.
Circle also shared news about a $110 million investment round led by Bitmain, the bitcoin miner that operates Antpool, one of the largest bitcoin mining pools.