The cryptocurrency market has been one of the biggest surprise stories of the past year. As Bitcoin, the juggernaut of the technology, experienced an unprecedented rise in 2017 that saw it close out the year at over $10,000, many industries watched and wondered how the new financial technology would impact their own businesses.
In many Southeast Asian economies, cryptocurrency could induce massive changes. Remittances contribute over US$26 billion to the Philippines’ economy each year — every cent of which could eventually be transferred securely and instantly with cryptocurrency technology. But for almost every Southeast Asian economy, blockchain could have revolutionary implications.
What soon became clear was that, despite the many advantages cryptocurrencies offer financial markets and mainstream consumers in developed and developing economies, the current iterations of the technology were not stable enough to gain traction. Since beginning of the new year, Bitcoin has fallen to less than half of the value it was trading at this past December, illustrating how confusing and unpredictable these digital assets can be.
Stability can lead to more mainstream acceptance
In order to solve the problem of volatility in crypto markets, the new trend in cryptocurrencies has been the so-called “stablecoins”. This new class of Blockchain-based tokens promise their users stability through either complex economic models that assist in the management of supply and demand of the market, or by backing the cryptocurrencies with real-world assets. One of the most widely used and controversial of these startups has been Tether, an Ethereum-based US dollar-backed stablecoin.
While many were initially excited about Tether, and its market capitalization exceeded US$2.2 billion, Tether has not published an audit of its funds in nearly a year, and was recently subpoenaed by the SEC.
Investors and markets have been left searching for another solution as doubt about the Tether platform grows due to its mystery and opacity. A new startup, backed by Stanford-StartX and Founders Fund, called TrustToken is looking to solve this problem of volatile and mysterious cryptocurrencies by offering TrueUSD, the first trustworthy, US dollar backed stablecoin on the market.
As TrustToken sees one of the main issues with current stable currencies is their trustworthiness, the company has organized themselves in order to ensure they know what their product should actually be worth. They plan to do this with their TrueUSD product by offering a token that is 100% collateralized by real US dollars. By establishing a network of fiduciary and banking partners, the startup ensures that their tokens will always remain backed by fiat currency, promising stability for the currency.
In addition, TrueUSD offers regular audits, a feature no other crypto asset on the market currently has. These monthly, transparent audits of the companies financials and real-world assets allow its users to make sure that their digital assets are always backed a real-world currency
Despite the rise of many new stablecoins, TrueUSD sets itself apart by offering a proprietary legal framework for users with real world protection over digital assets. Additionally, the platform offers enforceable legal rights for token holders, ensuring users protection of their accounts. The company itself never touches the funds — users become direct beneficiaries of the trust accounts, and send and receive funds directly from the bank holding the trust account.
Potential for hedging
While streamlining crypto trading remains one focus of the company, another offering that sets TrueUSD’s US dollar backed cryptocurrency apart from competitors is its applications for crypto hedge funds and traders. TrueUSD offers these traders a stable crypto asset that allows them to hedge bets in more volatile currencies without having to exit the crypto marketplace to do so.
For commerce, the company looks to utilize its structure as a trust to entice institutional and mainstream transactions. The mainstream consumer will also be able to benefit from the TrueUSD platform as it offers far simpler alternative to current cryptocurrencies without sacrificing the benefits of the technology.
Having at least one stable cryptocurrency means that everyday people can now enjoy the added security, privacy, and fast transactions speeds of crypto transactions without having to compromise on the stability of the value of their assets. This will allow for people to pay salaries, take out loans, and shop with crypto without the volatility that has plagued the technology in the past.
With cryptocurrencies emerging every day and more and more investors entering crypto markets, it is important to keep your eyes on coins that have the potential for longevity. These days, the main markers for longevity in the crypto world are stability and trustworthiness.
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