Can Stablecoins Foster Cryptocurrencies Adoption?

Abstract

Pegging to fiat currencies, stablecoins are cryptocurrencies with stable prices. Theoretically, stablecoins may mediate price volatility issues, which have been resisting the wider adoption of cryptocurrencies. And yet, their impact on fostering individuals ’ cryptocurrenc y adoptions remains unclear. In this study, we adopted hot cryptocurrency wallets (hot-wallets) as the context and the Push-Pull-Mooring (PPM) model as the theoretical foundations to test these impacts. Our preliminary results showed that less experienced cryptocurrency users may not understand immediately upon learning about stablecoins. They may even feel confused and become less motivated to adopt cryptocurrencies. Conversely, more experienced users may recognize the importance of stablecoins. Hot-wallets that have included stablecoins are more likely to be used by these experienced users. The significant difference between users in terms of experience has hinted that hot-wallet service providers may need to adopt more diversified strategies to engage different potential users.