Libra is accused of being a financial nightmare under the hegemony of the US dollar, and the gold stable currency is "more fragrant"?
Text | Edited by Lizhi | Produced by Bi Tongtong | PANews
Ten months after the launch of the white paper, the high-profile Libra released the second version of the white paper on April 16, and at the same time officially applied to the Swiss Financial Market Supervisory Authority for a payment system license for stablecoins. In the second edition of the white paper, Libra made many compromises for regulation. For example, in addition to the multi-currency stablecoin system, new single-currency stablecoin support is added, and the transition to an unlicensed system is abandoned in the future.
Libra draws on the practice of stable coins, and achieves stable and free flow of value by anchoring legal currency. Under expected conditions, it can be freely exchanged with legal currency.
There is also the central bank’s digital currency DCEP that has been circulated on the Internet for internal testing in the past two days. It is anchored to RMB at 1:1. As a substitute for M0, it also involves and draws on the concept of blockchain technology and stable coins. The director of stablecoins.
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The link between the real and encrypted world
In 2012, the concept of stable currency was born, relying on the USDT launched in 2014 to rise. USDT is issued by Tether, which shares the same parent company with the exchange Bitfinex, but the two have been prosecuted by New York state prosecutors on charges including defrauding investors and embezzling security deposits. In addition, Tether often issued a large number of additional tokens, for example, 1.3 billion tokens were issued within 18 days, so it is suspected that there is a potential risk of thunderstorms as a lingering cloud.
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Stablecoin transaction volume, data from stablecoinindex.com
The popularity of stablecoins stems from its nature, which includes the advantages of both cryptocurrencies and fiat currencies. First of all, due to its huge volatility, it is difficult for cryptocurrencies to become a tool for commodity pricing or payment. Otherwise, merchants or consumers may suffer losses due to price fluctuations of payment currencies.
More importantly, some cryptocurrencies have no value support or authoritative endorsement behind them. The price is only based on the consensus agreement of the people behind them, and many of them are even inflated and hyped prices. Like a tall building built in midair, it is easy to collapse. The stable price of stablecoin relative to legal currency and the value support behind it avoid these shortcomings. Whether it is a means of payment or a tool for hedging when cryptocurrency fluctuates, stablecoin has played an irreplaceable role.
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Stablecoins anchored to different assets
Some articles believe that the latest version of Libra is a "Trojan horse" that helps the U.S. dollar expand its territory, and will be a financial nightmare for sovereign countries in the third world. Is there a more valuable store of value than the US dollar? Yes, that is gold.
Commodity exchange in human society begins with the barter exchange and develops into an indirect exchange between things, in which the medium of exchange becomes the prototype of currency. There are many forms of currency in the development, and different countries and regions have found the most suitable materials for currency, precious metals are gold and silver. This is because gold is rare, chemically stable and easily divisible. Rare things are more expensive, and the consensus that gold has been used as currency has existed for thousands of years. Although almost no one uses it as currency now, gold has always been an investment tool for value storage.
Gold coins issued by the Kushan Empire, 3rd century AD
The paper currency we use now is no longer linked to gold, but depends on the credit of the issuer. It is a kind of credit currency, and countries can regulate the financial market through monetary policy. For example, during this period of time, affected by various factors, the U.S. stock market has repeatedly broken down, and a liquidity crisis has emerged. The Federal Reserve will reduce interest rates to zero, implement a large-scale quantitative easing policy and "print money" on a large scale to promote the economy.
Promotionalists believe that moderate inflation is conducive to economic growth. Although there is some truth, if the history is stretched out to 300 years, the pound, one of the oldest currencies, has lost 99.5% of its value, which is a staggering figure. Hyperinflation events also occur from time to time. In recent years, the inflation rate of the Venezuelan currency Bolivar has exceeded one million percent.
In addition to inflation, the country's fiscal deficit and interest payments also affect the public's confidence in its currency. In 2018, for example, the U.S. spent $371 billion on interest payments on its debt, and that figure is growing. In the long run, uncontrolled deficits will generate high annual interest, and the government needs to reduce other expenditures in order to repay the interest, which will force the government to borrow again, leading to a vicious circle.
Going back to the topic of stablecoins, if cryptocurrencies are anchored to fiat currency, there may be various problems with the fiat currency in the future, so stablecoins anchored to gold are also an important component of stablecoins.
Bankcoin Reserve is a stable currency related to gold. Its price is the highest price per ounce of gold in the past. It will be adjusted every month. If the price of gold rises above the historical price, the price of each BCR will also rise. Compared with other stablecoins anchored to fiat currencies, stablecoins linked to gold will become anti-inflation tools. As a value consensus for thousands of years, gold is a very valuable variety.
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Nine major patents, accumulated over time
Between 2014 and 2017, BCR obtained 9 patents granted by AAA Blockchain Limited and Gary McAlister. This includes innovations in deposits and savings, lending and finance, monetary systems, franchising, Islamic banking and Shariah compliance, blockchain systems, stock and bond management, private placement and high yield investing.
Taking the innovation of deposits and savings as an example, BCR proposed the method of using cryptocurrency in the financial industry. For example, when banks provide regular savings and other products, they can add cryptocurrency services, and then issue tokens to pay depositors’ interest. This is the idea of PoS Solutions applied to the traditional financial industry. This patent was obtained in February 2014, and now the thinking is still very advanced. Although there are no banks that provide cryptocurrency services, exchanges, wallets, etc. have similar coin deposit and interest-earning services.
There is also the foreign exchange transaction innovation proposed in 2017, which handles various businesses without geographical restrictions. Various financial institutions, such as banks, credit unions, fund management companies, etc., conduct transactions on the blockchain, and the processor will process all requests from senders and receivers in specific countries or regions, and link them with all requests from different countries. Senders and receivers are matched, increasing the efficiency of agencies. Due to their large reserves, these institutions can and are very suitable to become a member of PoS and maintain the operation of the network.
In addition to the patents accumulated silently over the years, BCR's value proposition also shows the precipitation of the past six years. Due to the stable price, BCR can be used as an intermediary for transactions, linked to the price of gold, and BCR can also be used as a value storage tool to combat high inflation and various uncertain events.
There is also the current PoS consensus mechanism, which allows users to obtain 10% annualized income through staking, and the network can quickly reach a consensus. It only takes a few seconds to transfer 100 million US dollars across the country, and the handling fee does not exceed 5 US dollars. Banks and other institutions can also conduct PoS to obtain mining income, reduce or cancel the interest of lenders.
In 2020, BCR will gradually launch new plans, including expansion tools such as market access programs, merchant onboarding programs and mobile applications.
Most of the projects launched in 2014 have long been lost in the historical dust of blockchain development. How far can BCR go? Let's wait and see.
