Stablecoins have already become an important feature of the blockchain world, allowing traders and other users to escape the volatility for which crypto is famous, while still keeping their funds in a form that can be quickly deployed into the market and moved around frictionlessly. We believe that stable crypto is of fundamental importance to blockchain e-commerce, which is why we have decided to integrate TrueUSD, a new stable coin develope by TrustToken, into our platform!
Crypto is notorious for its volatility. In fact, one of the regular objections to widespread crypto adoption is the problem of price stability: how can ordinary consumers be expected to use something that might lose 10-20% of its value in a day, and 80% or more in the space of a few months?
As a result there have been several attempts to create so-called stablecoins over the last few years. Some have used algorithmic alchemy to ‘peg’ their price to USD, such as Nubits and BitShares’ smartcoins. These have not found widespread acceptance and there are questions around their viability, not least because in some cases their models only work within certain tolerances of price fluctuations – meaning that their proposed answer to moderate market volatility is, ironically, vulnerable to extreme market volatility.
This explains why Tether has proven so popular. USDT tokens are supposedly backed 1:1 by real dollars, which are held in a bank account. Tether has become the de facto standard for locking value on the blockchain in the crypto world. However, there are numerous problems with Tether, not least the trust issues that continue to plague the company, and the fact that it is not possible for ordinary traders to cash out their USDT to a bank account.
The combination of clear market need and real or perceived issues with Tether is why we have chosen another solution for the BitBoost marketplace, TrueUSD. This again is backed 1:1 by funds held in bank accounts, but there are several differences to USDT. The process takes place within a clear legal framework. Holdings are regularly and professionally audited, with results published transparently. Moreover, the TrueUSD company itself doesn’t have access to any funds, meaning there isn’t the same conflict of interest that exists with Tether. (Tether and Bitfinex are essentially the same entity. As an analogy, this is like the Federal Reserve also owning the New York Stock Exchange. The potential for abuse should be clear.) Instead, there is a series of professional ‘Trust firms’ with dedicated banking facilities to ensure tokens can always been redeemed at $1.
All of this has the effect of moving USD onto the blockchain without the opacity and confidence issues that have (rightly) never left Tether. We are exploring integration now and will keep our community posted on our progress. We are excited to be able to add this service to the BitBoost marketplace, knowing that it will address one of the biggest obstacles to mainstream adoption of blockchain-based e-commerce. In the meantime, you can still use ETH to purchase items on the platform.