The MXNT is tether's new innovation for the Latin market that leaves some questions.
Hello everyone...
As many say, bear markets bring interesting developments that are driven when bull markets come, we have seen that in our own blockchain, as it is in bear markets that the best developments emerge that have brought a lot of eyeballs to Hve.
But today I wanted to talk about a new path that one of the biggest companies in the crypto industry is taking, and how this innovation can be beneficial or bad for users. This is Tether Operations Limited and its new inclusion in the Latin stablecoin market, with the launch of the MXNT stablecoin, which is the 1:1 parity of the Mexican peso.
One of the main reasons for the creation of a stablecoin pegged to the Mexican peso is the strong demand for foreign exchange in the corporate sector and the great need for fast and cheap transactions. Since Mexico is one of the countries that receives the most remittances of dollars, and since the exchange processes can be slow or very costly, with the MXNT everything can take an interesting turn.
In addition, the fact that in recent years cryptocurrency trade to the Latin region has increased significantly, gives rise to developments such as these to achieve greater integration and normalization of the use of cryptocurrencies in the formal economy. And another benefit is that a peso-linked stablecoin will provide a store of value for those in emerging markets and, in particular, in Mexico because it can minimize volatility for those seeking to convert their assets and investments from fiat currency to digital currency. So this currency will initially operate on the ethereum, tron and polygon networks, although it is anticipated that other blockchains compatible with the MXNT will be added.
But although this innovation is a new way for the people of Latin America, it is also a huge disadvantage because the currencies of developing countries are weak and constantly devalue.
For example, if we take the case of venezuela, the inflation is so ridiculous that every day billions of stablecoins linked to the bolivar would have to be issued because it is worth less and less every day. It is as chekohler explained In his publication, no matter how many ways they try to create a stablecoin linked to a fiat shit coin, the project will never improve the economy because it is based on a failed currency in the first place.
And the currencies of latin america, africa, and asia are so weak that many people in those countries choose to save their money in hard currencies like the dollar, euro or pounds, which although they also suffer devaluation is not as abysmal as the currencies of developing countries, where the monthly devaluation is 4% to 10%.
It is as the popular saying goes: "Build on solid rock, not sand". So making stablecoins linked to weak currencies is clearly building something very valuable on sand, sooner or later it will disappear. That is why the best option is to give more publicity to the stablecoins that already exist in order to achieve greater adoption.
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