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A Look At A More Advanced Stablecoin

Stablecoins are cryptos whose value is pegged to a real-world asset, like the U.S. dollar. They’re in demand because crypto prices jump around too much to be used by vendors to price their products.

Benzinga · 03/04/2020 19:36

Stablecoins are cryptos whose value is pegged to a real-world asset, like the U.S. dollar. They’re in demand because crypto prices jump around too much to be used by vendors to price their products.

But there’s a big problem with the first generation of stablecoins: Users have to trust some central authority to hold sufficient dollar balances to back the coins they issued.

What if they cheat? Get hacked? Or suppose hostile government regulators seize their bank accounts. In each case, token holders can get left holding the bag.

Now for the first time, there’s a stablecoin that promises to be as trustless, censorship-resistant and non confiscatable the King of Crypto itself: DoC.

I’ll tell you all about DoC in a moment. But DoC is the last link in a long chain of FIVE important innovations in the crypto space. 

So, let me start from the beginning:

Innovation No. 1: Stablecoins, like Tether or True USD, are pegged to the U.S. dollar, but are centralized. This inspires ...

Innovation No. 2: Decentralized stablecoins like DAI, pegged to — but not backed by — the U.S. dollar and collateralized by Ethereum (ETH, Rated “A-”). This then leads to ...

Innovation No. 3: sUSD, a decentralized stablecoin collateralized by its own native token (SNX). Users are forced to put up a lot more collateral when compared to DAI since SNX is new and unfamiliar. 

At this point, it’s clear that a stablecoin collateralized by Bitcoin (BTC, Rated “A-”) could be a better choice: Bitcoin is vastly more liquid than other crypto assets. It has the highest institutional and end-user adoption. Plus, it has the most conservative monetary policy.

However, stablecoins require smart contracts, and Bitcoin, by itself, does not accommodate fully programmable smart contracts. This brings us to ...

Innovation No. 4: Rootstock RSK (RBTC), which enables smart contracts to run on Bitcoin. And this virtuous cycle continues with ...

Innovation No. 5: Dollar On Chain (DoC), Issued By Money On Chain (MOC)

This is a decentralized stablecoin cut from similar cloth as DAI and sUSD.

But instead of being collateralized by Ethereum or its own native token, it’s collateralized by Bitcoin directly. And because Bitcoin is a stronger form of money than Ethereum, this gives it superior crypto liquidity and security.

The way it works involves two tokens:

  • DoC, a stablecoin pegged to the U.S. dollar, and
  • BPro, a native coin pegged 1:1 to Bitcoin.

And there is incentive for Bitcoin owners to switch over to BPro: It allows owners to earn interest on their Bitcoin. 

For current Bitcoin owners, the only way for investors to make money is to buy and hold BTC. Then, they wait for the price to go up.

So, it’s safe to say that there are lots of Bitcoin owners who would jump at the chance to earn some income on at least some portion of their BTC. Especially in the near-zero interest rate climate we’re in today!

The precise mechanics of how all this gets done are quite complex. But the bottom line is this:

  • DoC holders get what could be the most secure and most robust stablecoin invented to date.
  • And investors can effectively earn “interest” on their Bitcoin.

Want To Buy Some DoC?

I think it’s probably too soon for this step. Purchasing DoC is complicated as it isn’t offered on exchanges yet. 

The better investment right now is Bitcoin itself — these kinds of new projects can only enhance Bitcoin’s usage and value. 

Check out Weiss Crypto Ratings and Indexes:
https://www.benzinga.com/cryptocurrency/weiss-crypto-ratings/  
https://www.benzinga.com/cryptocurrency/weiss-crypto-indexes/ 

Image by Darwin Laganzon from Pixabay