For years, blockchain traders and exchanges have invested significant time and resources in an attempt to solve Bitcoin's biggest shortcoming, volatility. While there is potential for this technology to disrupt just about every industry imaginable, the unpredictable nature of the currency is a fundamental roadblock that could delay progress for years.
To gain widespread adoption among consumers, enterprises and investors, cryptocurrencies must offer reliability and predictability that people can trust. Furthermore, they must do this without compromising blockchain's core tenets of decentralization and security. The future of digital assets largely depends on the success of this development.
Solving the Stability Problem in Cryptocurrencies
The concept of building a "stablecoin" is not particularly new. However, there are numerous technical and operational challenges to scaling a stable cryptocurrency, and teams have tried and failed to develop a comprehensive solution.
Tether, perhaps the best known startup in this sector, holds their fiat currency backing in an unaudited bank account in Taiwan, and recently prevented customers from signing up to redeem their Tether tokens. There is no auditing or legal protection offered to their token holders.
Tether's laundry list of problems, as well as the broader need for a stablecoin in the blockchain ecosystem, is what sparked the team behind TrueCoin to jump into action. They have developed a solution that removes one of the major barriers to crypto adoption, as they provide an answer to the critics who say that "digital assets are not real money." TrueCoin appears ready to make crypto and digital assets accessible and easily convertible. Streamlining this marketplace will likely drive mainstream adoption and lift the entire crypto-economy.
Taking A Deeper Look at TrueCoin
The TrueCoin Project is the world's first "USD-backed stablecoin that is 100 percent collateralized, legally protected and transparently audited." They have a highly experienced team, with backgrounds from Stanford, Palantir and Google, and backing from Founders Fund Angel, Stanford's StartX and Blocktower Capital.
The team has developed and implemented a legal framework for collateralized cryptocurrencies in collaboration with Cooley and Arnold & Porter, and "have a growing network of fiduciary, compliance and banking partners." With resources and partnerships in place, their team is on a mission to provide a usable cryptocurrency to today's consumers.
TrueCoin offers a much-needed alternative to the other stablecoins on the market. It uses "distributed trusts as a substitute for centralized bank accounts," upholding fundamental standards of decentralization. The trustees are legally bound to exchange tokens for dollars, since the token holders are the beneficiaries of the trust.
Following this model, when a user wants to receive TrueUSD to use on an exchange, they simply go through a standard identity-verification process, whitelist their Ethereum address, receive wiring instructions and, in just a few taps, send the funds to the correct bank account in the network. TrueUSD then sends the equivalent number of tokens to their Ethereum address. The repeatable process works both ways, as users can also easily redeem USD for TrueUSD tokens.
The Value and Benefits of Leveraging Trusts
Rather than holding the funds themselves, TrueCoin accomplishes this with trusts. Trusts are extremely versatile legal conduits with strong protections for their ownership and management.
A USD-backed stablecoin has a number of downstream benefits for the rest of the crypto-economy. Most importantly, it will help onboard financial investors and hedge-fund managers into the blockchain world, providing more clarity and stability to the market. Additionally, a USD stablecoin opens the door for mainstream commerce, salaries, loans and escrow contracts to enjoy the digital benefits of cryptocurrencies as well as the stability of the familiar U.S. dollar.
Imagine what would happen if you currently received a salary of 10 BTC per year or kept your business's revenue in cryptocurrency. The fluctuating prices would prevent you from planning for the future. However, TrueCoin will enable you to enjoy the benefits of digital currencies in commerce (including anonymity and quick transactions) with the stability of USD. This also opens up a host of new investment opportunities for traders and crypto-investors.
Beyond the US: Supporting Developing Markets
TrueCoin will also be valuable in developing markets like Argentina and Venezuela, which have seen wildly fluctuating national currencies and extreme hyperinflation. The wide-scale adoption of TrueCoin promises to provide individuals with all of the security benefits of digital assets for a fraction of the cost of Bitcoin's expensive transaction fees.
2018 is an important year for the growth, and mainstream adoption, of cryptocurrencies. TrueCoin is poised to accelerate the growth of the crypto-economy and enable more people to safely invest and make transactions using cryptocurrencies.