It’s finally happening: more and more companies are launching dollar-backed crypto tokens, meaning the Age of Tether might finally be coming to an end.
Let’s face it: fiat isn’t going out of fashion. The Bitcoin Faithful might rail against the Almighty Dollar and its history of depreciation since America left the gold standard, but it’s still the reserve currency of the world (and, as it happens, the currency in which most holders value their BTC). Whatever the long-term fate of the dollar and its fiat cousins, it’s not going anywhere just yet.
But the conventional fiat world doesn’t interface smoothly with crypto, thanks to the frictions and costs of the banking system. That’s where crypto dollars come in: tokens that are backed by fiat reserves but move around the world as easily as any other crypto coin.
Here at Inferno, we’ve never been hesitant to show our suspicion of Tether, currently the foremost such ‘stablecoin’. Tether have never been transparent about the dollar reserves that supposedly back their USDT token, leading many critics to claim it’s not fully backed at all and that Tether have been printing money – effectively running a fractional reserve. (For our part, we believe the facts are better explained by Tether printing unbacked USDT, using them to buy BTC on Bitfinex, then selling those bitcoin on different exchanges for USD with which they retrospectively back the USDT. Very sneaky if so.)
And so we were very happy to learn that TrustToken were getting in on the act with their TrueUSD token. This is also a stablecoin, backed by dollars, but TrustToken don’t hold any funds themselves – unlike Tether. They use multiple third parties, who have fully audited accounts, and the system is governed by smart contract for transparency. This approach removes the centralisation and opacity of Tether’s method, and we hope they will be rewarded for doing what Tether should have been doing from the very start.
But that’s not all! Only yesterday the Winklevoss Twins announced that Gemini – their regulated exchange – would be launching the Gemini Dollar. Billed as the ‘world’s first regulated stablecoin’ (by the Winkies, anyway) this is an ERC20 Ethereum token, again backed by real dollars, that can be cashed out for the real thing on the Gemini exchange.
And there’s still more! Also yesterday, startup Paxos announced it was launching a fully-backed dollar token, regulated by the state of New York – apparently competing to beat Gemini Dollars to the punch.
Well, we don’t care who was first. We’re just pleased we’re seeing more and more options for dollar-backed crypto tokens. The easier it is to send money around the world and to get into and out of crypto, the faster the crypto economy can grow. We’re expecting the fiat-backed token space to get pretty crowded in the future. And that will be great for everyone.
Except Tether.
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