At the 2018 Texas Bitcoin Conference in Austin October 27-28, I will be presenting a unique stable coin implementation we have been researching at Factom Inc.
A stable coin (or pegged token) is a token whose value is pegged to some asset or value defined in the market. To date, stable coins have been implemented with asset reserves, cryptocurrency reserves, a smart contract that manages the stable coin supply, or some combination of these techniques.
We have developed another approach, one that is uniquely suited for a blockchain architecture like Factom. The approach is purely blockchain based, making it auditable on chain. The approach also avoids many issues faced by asset backed tokens, cryptocurrency backed tokens, or algorithmically managed tokens.
Stable coins allow users to hold cryptocurrency whose value is pegged to traditional currencies or assets. Cryptocurrency exchanges often cannot accept traditional currency deposits for regulatory and banking reasons. Stable coins, for example, allow such exchanges to trade against a USD pegged token. Stable coins give organizations the ability manage a cryptocurrency asset – the stable coin – in the same way traditional currencies are managed: simplifying accounting, budgeting, and taxes.
A range of stable coins enable:
- Payments and invoicing in traditional currency terms
- Smart contracts denominated in traditional currency, limiting currency risk
- Faster, cheaper B2B settlement
- Faster, cheaper remittance
- Shelters for capital when the cryptocurrency market is uncertain without leaving cryptocurrency
- Wider options for treasury management without leaving cryptocurrency
While very promising based on our modeling and research, our approach still requires study, testing, and further analysis. This is an effort we believe should be performed transparently, and we look forward to presenting the approach at the Texas Bitcoin Conference this month.
Register for the Texas Bitcoin Conference in Austin October 27-28.