How TrueCoin Offers Stability to the Cryptocurrency Industry - Moderator

23 Jan 2018 - 10:44 |

How TrueCoin Offers Stability to the Cryptocurrency Industry

Many of the biggest opponents of cryptocurrencies note that few people actually buy things with crypto, and cite that as the major reason why the industry is a bubble. While this logic might make sense, investors need to evaluate (1) where cryptocurrencies’ value comes from and (2) what needs to happen for mainstream consumer use to occur.

During the dot-com bubble, a large number of firms rushed to the new technological frontier. While many of them had valuations that surpassed their true value, a few companies, such as Google and Apple, survived and are now some of the most valuable companies in the world. Cryptocurrencies are the new technology of this era, deriving their value from their technological innovations and use cases. These use cases and value are not necessarily tied to consumer purchases.

Just as with gold, Bitcoin has a number of intangible values, but ultimately its price is determined via a real-time auction between buyers and sellers. In this system, either group has the power to cause pump-and-dump schemes to manipulate price. Since most of the investors are likely uninformed and prone to risk, price is extremely volatile, but price does not need to be determined by buyers and sellers.

The variance that arises in cryptocurrency prices is largely what causes a lack of consumer use. Every currency needs to be able to hold a certain value and not change before you can pay someone. Cryptocurrency prices are sporadic, which limits their use as currency and relegates them to investments and tokens for tech use.

However, a trend called “stablecoins” might enable more mainstream adoption of cryptocurrencies. TrueCoin, which is launching in 2018, has built an impressive stablecoin that is more transparent and reduces price variance. Unlike many other stablecoins, TrueCoin conducts monthly transparent audits of their assets and publishes them for public view. Additionally, they have structured a number of enforceable legal rights for investors and have implemented a required 100 percent collateralization of tokens via U.S. dollars.

TrueCoin’s work to reduce price variance will likely lead to new and better means of pricing cryptocurrencies. Since part of the stablecoin process is to issue and buy excess currencies during surges and crashes and thus keep the price largely stable, TrueCoin is helping to create a different crypto industry, one that is not based upon irrational exuberance and baseless prices. This will bring much needed stability to cryptocurrencies and will help prevent pump-and-dump schemes.

TrueCoin is also demonstrating how governance works with a cryptocurrency, which is in theory decentralized. While the U.S. dollar is technically a stablecoin that is governed by the Federal Reserve, cryptocurrency regulation is decentralized. TrueCoin ultimately relies upon decentralized market conditions to determine pricing; they just have a system in place to limit short-term non-real fluctuations. As cryptocurrencies become more regulated by governments, it is likely that decentralized governance systems and audit procedures for asset transparency will become industry norms.

TrueCoin has also shifted people’s legal presumptions regarding cryptocurrencies. Some of the past stablecoins have utilized collateral requirements to create stability. Just as your house can serve as collateral for your mortgage, cryptocurrencies can serve as collateral. Often, companies have too little collateral and refuse to release records to confirm what collateral they actually have. TrueCoin has emerged with a full suite of legal and technological solutions to help combat this trend.

Due to TrueCoin’s structure, which incorporates legal rights for investors and places transparency as a prime concern, they have enabled a new trend of mainstream use cases for cryptocurrencies. Many have feared government involvement would destroy the value of the technologies, but TrueCoin gives us idea of what a quality cryptocurrency company looks like.

Overall, stablecoins are a technology poised to make cryptocurrency less volatile and more usable. TrueCoin is perhaps the most promising of the new stablecoins, and has made significant progress toward integrating true innovation with the early-stage industry.