What is the Anchor Stable Coin?

In this episode, I chat with Tijana Gertner, Chief Product Officer with Anchor. We talk Anchor, Stablecoins and the Cryptocurrency space.

About Anchor: Anchor is a two-token, algorithmic stable coin pegged to global economic growth.

For more information on Anchor go to theanchor.io

For the Anchor Whitepaper please go to https://theanchor.io/whitepaper/

Anchor can be found on Twitter @theanchor_io

Advertisements

USDT/Tether Comes Under Further Scrutiny

As stated in a recent post. There is a bill in California that would allow Cannabis businesses to pay their state taxes in stable coins. A move that would go a long way towards mass adoption. The issue as this adoption approaches, attention will turn to the cryptocurrency space.

NY Attorney General Letitia James said in a statement:

“Our investigation has determined that the operators of the ‘Bitfinex’ trading platform, who also control the ‘tether’ virtual currency, have engaged in a cover-up to hide the apparent loss of $850 million dollars of co-mingled client and corporate funds”.

So what does this have to do with the Cannabis Industry?

On the surface, very little. That is unless you take into account that the goal is to use cryptocurrency for the Cannabis Industry. Which is currently a cash only industry due to federal regulation.

USDT has been a mainstay in the crypto space for some time, a digital asset pegged to the US Dollar. This claim has come under more scrutiny in the space lately due to USDT falling below $1.00 USD on multiple occasions. The whole point of Stable Coins are they should keep their value aka stay stable.

Tether (USDT) is a cryptocurrency with a value meant to mirror the value of the U.S. dollar. The idea was to create a stable cryptocurrency that can be used like digital dollars.

Coins that serve this purpose of being a stable dollar substitute are called “stable coins.”

Tether converts cash into digital currency. To anchor or “tether” the value of the coin to the price of national currencies.

When news that USDT is being used to mask financial dealings, it becomes less likely government will okay it’s use. Especially for Cannabis which itself is still controversial.

We still have the issue of stable coins and the counter-party risk involved. Where companies that issues stable coins may or may not have the amount of USD or assets they claim to.

Click here for more on stable coins and Counter-Party Risk

This is where advocacy and activism come into play. The crypto/cannabis community have to do our part to show that issues like Bitfinex/Tether are not the norm. That crypto is a viable option for the future of the Cannabis Industry.

Stay Tuned…

Jason Nelson

@dragonwolftech

References

Attorney General James Announces Court Order Against “Crypto” Currency Company Under Investigation For Fraud. (n.d.). Retrieved from https://ag.ny.gov/press-release/attorney-general-james-announces-court-order-against-crypto-currency-company-under

DE/Coindesk, N. (2019, April 26). Bitfinex Covered $850 Million Loss Using Tether Funds, NY Prosecutors Allege. Retrieved from https://www.coindesk.com/bitfinex-ny-prosecutors-tether-850-million-allege

If you enjoy my work, please consider donating through one of the following:

  • Litecoin (LTC) LYmx6pC1hp2U6XeUm3uiq2ufn5XtBZZSP5
  • Bitcoin (BTC) 1F9fRZoHAJmAEbnxrkezGfmM8ZSi9XTZrQ
  • SmartCash (SMART) SP4c6Qv9hxvYysjbhumnYKstJdT725Ghi8
  • Bitcoin Cash (BCH)
  • qrhegky5w550reuwgntjasmkvk36hua3qvyvxklmy3

What are Stablecoins & Counter-Party Risk?

 

So-called “Stablecoins” have emerged in the Cryptocurrency space; while mass adoption has been a dream of HODLers and Traders alike, the volatility of Cryptocurrency has always been a barrier to that adoption. Stablecoins are intended to deal with that volatility by having the Cryptocurrency backed by a fiat currency, in the case of USDT and TUSD, that currency being the United States Dollar (USD).

The Wikipedia entry for Stablecoin defines this type of Cryptocurrency as Any cryptocurrency pegged to a stable asset, such as gold or fiat currencies.

Why would an investor want to invest in a Stablecoin? Currently, Crypto is in a bear market and with prices down, the promise of a currency that will not the see fluctuations that currencies like Bitcoin, Ethereum, Litecoin experience are an enticing prospect.

I recently received an invite to have a look at hbus.com an exchange that includes traditional Cryptocurrency pairs (BTC, ETH) and Stablecoin pairs (USDT, TUSD). Seems like a legitimate platform, but I wanted to see if any wallets outside of the exchange supported TUSD. I checked Exodus.io’s wallet Exodus Eden and found a listing for TUSD. What drew my attention was there was a note under the listing about Counterparty Risk.

So what is Counterparty Risk and how does it relate to Stablecoins?

According to Investopedia.com, Counter Party Risk is defined:

Counterparty risk is the risk to each party of a contract that the counterparty will not live up to its contractual obligations. Counterparty risk is a risk to both parties and should be considered when evaluating a contract.

Read more: Counterparty Risk

Other Stablecoins that could be said to have this Counterparty risk is the Petro of Venezuela which is pegged to the New Bolivar and the country’s supply of oil.

The Exodus support page notes: Digital assets that are tied to real-world commodities or Government-issued fiat currencies are good examples of assets that carry counterparty risk. These assets are dependent upon a company holding enough of a given currency or commodity to “back” the digital currency in circulation. The risk inherent to such a model is that the company issuing the digital asset may not actually own or control the real-world asset to back the digital counterpart.

So the question that investors will need to ask themselves is are Stablecoins any better than a credit card? Is the reward of a moon shot worth the risk of having currency tied so close to the fiat world. Considering the whole point of Cryptocurrency is not to be involved with fiat, does it make sense for investors to bother with Stablecoins but we may have to deal at some point with Stablecoins if mass adoptions is ever likely to happen. Stay Tuned.