PWC joins in issuing stable currencies, but will stable currencies be stable?


PWC joins in issuing stable currencies, but will stable currencies be stable?

Bianews reports that PwC has been involved in the issuance of stable currencies and is working with Cred, the encryption currency lending platform, to launch a stable currency pegged to the U.S. dollar. This is the first time a well-known accounting firm has joined the ranks of stable currency issuance.

There are more than 10 stable currencies in a month.

Since the New York Financial Services Agency approved the US Exchange Gemini and Block Chain Startup Paxos to issue GUSD and PAX stabilized currencies on September 10, the encrypted market has set off a wave of stabilized currencies. Throughout September, 15 institutions have introduced 13 stabilized currencies, mostly anchored US dollars, and anchored offshore renminbi, Australian dollar and Japanese dollar. Yuan and gold.

Among them, CITIC International Asset Management Limited and Galaxy Digital Asset Management Limited signed an agreement to issue an asset certificate WIT anchoring offshore renminbi in exchange with Galaxy Capital Management.

Swiss block chain start-ups Eidoo also announced the launch of a stable gold ekon linked to gold. Hiroshima Technologies announced a yen-linked stabilization program, and Goldman Sachs and BitContinent-backed Circle officially released the USDC in late September.

BitTrade, the Australian Digital Monetary Exchange, announced that it would work with Emparta, a block-chain employment platform, to launch a stable currency based on the Australian dollar in 2019. CollinStar Capital announced a partnership with Blockchain Global to launch the Australian dollar-linked stable currency AUDF in October.

The London Block Exchange also announced plans to introduce a new stable currency, LBXPeg, linked to the pound.

What is stable currency? What are the advantages?

At present, the legal currencies of various countries do not possess the global circulation property, and there are some painful points in transnational payment, such as inefficiency, high cost, and intervention by third parties. To some extent, the encrypted currency of these painful points can solve the problem of unstable value.

Such as Bitcoin, Ether Fong, Swiss currency and other mainstream encryption currency value instability, common violent fluctuations, not only hinder its application, circulation.

In the field of payment, stabilized currency is combined with decentralized system of encrypted payment network and relatively stable price level, and is linked to some stable assets, such as gold, US dollar, etc. Thus, the monetary value of unit price can be kept stable to a certain extent, which has great potential in the field of payment. Solving the problem of payment can play a more important role in financial trade.

As pointed out in the report "The Future of World Trade: How Digital Technologies Change Global Commerce" recently released by WTO, block chains have the potential to change trade patterns and transactions, and fundamentally change the way financial institutions flow capital.

In terms of value storage, investors are also looking for more stable encrypted assets to store value, to avoid excessive shrinkage of assets due to value fluctuations and other high risks.

At present, there are three main types of stable currency: 1. Statutory asset-backed stable currency; 2. Digital asset-backed stable currency; 3. unsecured/algorithmic stable currency.

Is stable currency stable?

Of course, there are different views on stabilizing currencies. At present, the total market value of the stabilized currency market is less than $3 billion, less than 1% of the total market value of the encrypted currency market. The USDT, which claims to be able to exchange one dollar to one, accounts for 90% of the stable currency market, with a total market value of more than $2.8 billion.

USDT is a kind of statutory asset-backed stable currency, which was officially issued by Tether in 2015. It can be said that USDT is the precedent of stable currency, and it is also regarded as the transition program from digital currency to real-world application at this stage.

But Zhao Dong, an investor in the encryption market, argues that the success of USDT is temporary, abandoning the independence of monetary policy in order to achieve high liquidity and anchor the "stability" of the dollar. While other stable currencies want to be independent and free to flow, they can only give up stability. The so-called "stable currency" has naturally become a false proposition.

Even a temporarily successful USDT carries a lot of questions, such as the centralization of opaque team information, and Tether, the publisher of the USDT, as the centralized trustee of the US dollar, is questioned whether it has an equivalent dollar on its books.

In March 2017, Wells Fargo froze three Bitfinex bank accounts in Taiwan and suspended its U.S. dollar remittance business. In September, Friedman LLP, a financial audit firm, said it had not evaluated Tether's bank accounts and said its funds were likely to participate in other businesses besides tokens and cash exchanges. Investment activities.

In November, Twitter users wrote that Bitfinex manipulated the price of Bitcoins through USDT, and that Tether had no evidence that USDT actually converted $1:1.

To question, Bitfinex and Tether first accused netizens of unhealthy motives, and Tether later said USDT might be backed by other digital currencies, not the dollar. Bitfinex faces further scrutiny. Recently, there are rumors that Bitfinex is facing bankruptcy, but Bitfinex subsequently denied the rumor.

However, this series of turmoil shows that the USDT information is opaque, USDT circulation by what factors control and to explain to the user, the user has no legal way to query Tether's bank account dollar amount, whether sufficient cash is not known.

Secondly, Tether mentions in his exemption clause that he is exempt from payment of French currency under any conditions, including the liquidation of the company. The trust crisis brought about by centralization has not been solved in USDT.

Digital asset-backed and unsecured/algorithmic stable currencies can remove the need for third-party trust intermediaries to a certain extent, and solve the centralized trust risk. However, there are also problems such as stability depends on the market value of encrypted currency collateral, market value fluctuation risk and system stability.

Whether from the point of view of system design or circulation application, the road of stabilizing the currency is long and obstructive. Every point of progress and promotion needs to be doubly verified and promoted. I hope that each of the later generations will not only seek profits in the newly opened market, but will really strive to provide a stable solution.


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