trust Archives -
Nissan’s ex-Chairman Carlos Ghosn was charged Friday with breach of trust, according to the Tokyo District Court, making the star executive’s release unlikely for months.
Ghosn, arrested Nov. 19, was earlier charged with falsifying financial reports in underreporting his income by about 5 billion…
Journalists in Gambia have launched a self-regulatory body they hope will offer legitimacy, and far more freedom, to media emerging from a dictatorship that ruled the tiny West African nation for more than two decades.
A 92-year-old Native Hawaiian princess has changed her trust to ensure her wife receives $ 40 million and all her personal property, including her Chihuahua “Girlie Girl,” according to court records. Abigail Kawananakoa inherited her wealth as the great-granddaughter of James Campbell, an Irish businessman who made his fortune as a…
This article about the problem with stablecoins was written by Kevin Murcko, the CEO at cryptocurrency exchange, CoinMetro, and forex broker, FXPIG.
Stablecoins — digital coins which peg their value rigidly to the dollar, the euro, or a collage of national currencies — are all the rage right now. Tether, in particular, is on everyone’s lips. In fact, it’s one of the most heavily traded cryptos in the market right now.
The appeal of Tether and other stablecoins is somewhat understandable. All cryptos are nascent assets; speculation, rather than the usefulness of the technology or the underlying asset, is what’s mostly been driving price movement. That’s led to wild volatility.
Traders love volatility, but not unreasonably, some people see a problem. Volatility is broadly incompatible with the concept of a day-to-day currency and a store of value. “Stablecoins” have arrived to fix this by, ostensibly, digitizing a fixed value in terms of dollars or an equivalent.
The Use Cases for Stablecoins
Certainly, there are a handful of legitimate use cases for stablecoins.
Let’s say a liquidity provider owes me $ 0.5 million. Maybe I need that money immediately to be able to rebalance my book — the traditional banking system isn’t the best way to do that. Even if we’re with the same bank, it can take a while to clear that transaction.
Stablecoins are useful because I can instantly clear funds back and forth. They offer the convenience and speed of using crypto without the caveat of volatility.
As the International Monetary Fund’s Christine Lagarde pointed out in a speech this month, Central Bank Digital Currencies (CBDCs) are another intriguing opportunity. While the benefits aren’t fully understood, CBDCs have the potential to limit costs and risks to payment systems, mitigate fraud and money laundering, and potentially even boost financial inclusion throughout the developing world.
Substituting Fiat Currency
Beyond these examples, however, stablecoins really struggle to prove their worth. Front-end, business-issued stablecoins (practically all stablecoins being traded at the moment) fall flat.
Currently, these stablecoins are used as substitutes for fiat on crypto exchanges that don’t have access to central bank-issued money. It’s not that these tokens are preferential to fiat. Rather, they’re band-aid solutions for retail exchanges which, for various reasons, can’t open and maintain adequate fiat on-and-off-ramps — usually because they aren’t properly licensed to offer fiat, or because they don’t have access to the necessary banking.
Why, in most circumstances, aren’t stablecoins preferential to fiat? It ultimately comes down to trust.
As we all know, crypto was originally intended to be trustless. The Bitcoin whitepaper laid out a vision to escape “to transact directly with each other without the need for a trusted third party.”
What stablecoins represent, in many ways, is the antithesis of that idea. The crypto community now uses privately issued tokens or coins that are pegged to the very currencies they originally wanted to pull away from. That’s problematic for a number of reasons.
Stablecoins require you to have confidence, not only in the government, but in an undependable, easily corruptible private company. We have to place our faith outside of the chain and in these companies’ ability to self-regulate supply and demand.
The Collateralization Problem
That’s a tall order. Stablecoins can be split into three states of collateralization, or the extent to which the coin is backed one-to-one by fiat. Some coins are fully collateralized, others are partly collateralized, and others are entirely uncollateralized. Unfortunately, all provide insufficient mechanics to properly regulate price.
For noncollateralized tokens, value is essentially suppressed by “printing” digital money. That’s all well and good, but when the price drops, it’s not possible to un-issue what’s already in circulation.
Here’s the snag. If the smart contract can’t keep the price at $ 1, then the algorithm is forced to issue bonds, promising users an entitlement to coins in the future. The bonds are then redeemed, and the price returns to $ 1.
That’s the theory, at least. The issue is, these bonds can only really be serviced if the platform is in an overall state of growth. The headache arises when the price keeps on dropping, and increasing numbers of bonds have to be issued until this price returns to trading level or above par. Bonds can’t be issued indefinitely.
The Fundamental Flaw: Artificial Inflation
Partial collateralization presents a minor improvement over the complete lack of reserve assets, but it still has a fundamental flaw: If confidence in the platform dips, then the company has to artificially inflate the price of its token by drawing on a finite pool of fiat reserves, preventing the price from plummeting. This, of course, has a limit. A company can only buy back so much of its own currency.
Presumably then, “fully collateralized” models like Tether are therefore reliable? Not really.
Even if we take the company for its word (there’s some uncertainty as to whether their assets are fully collateralized), it still doesn’t make much sense to abandon the relatively safe greenback for an inconvenient crypto that doesn’t always have fiat parity, provides no consumer protections, and is vulnerable to hacking.
Stablecoins: An Awful Idea
Central banks may not be the ideal institutions to trust, but many have stood resolutely for decades with the primary goal of maintaining our trust in their money. If privately backed stablecoins are designed to replace our reliance on these central banks with a reliance on a combination of both central banks and their loosely regulated businesses, then this seems like an awful deal to say the least.
Let’s not confuse lack of volatility with stability. That’s a dangerous mistake to make. Yes, many stablecoins do have relatively “stable” prices, but “stability” — in another sense of the word — is also about reliability, and that’s one thing that can’t be said of stablecoins, which demand far more trust than the original fiat.
Do you agree that stablecoins are overhyped? Can stablecoins solve the problem of volatility? What is the future of the stablecoin?
Images courtesy of Shutterstock
OP-ed disclaimer: This is an Op-ed article. The opinions expressed in this article are the author’s own. Bitcoin.com does not endorse nor support views, opinions or conclusions drawn in this post. Bitcoin.com is not responsible for or liable for any content, accuracy or quality within the Op-ed article. Readers should do their own due diligence before taking any actions related to the content. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any information in this Op-ed article.
DALLAS (AP) _ NexPoint Residential Trust Inc. (NXRT) on Tuesday reported a key measure of profitability in its third quarter.
Tinseltown turns its gaze back to technology in “Trust Machine: The Story of Blockchain,” which opens on Oct. 26 at Cinema Village in New York City. However, unlike most popular media representations of the cryptocurrency revolution, Alex Winter’s new documentary film doesn’t dwell on the price of bitcoin or its frequently alleged ties to criminal activity.
The feature-length documentary, narrated by actress Rosario Dawson, does look at cryptocurrencies and related subjects such as mining. However, it mainly focuses on the political aspects of blockchain technology and why governments and the big banks fear it. It also looks at technological applications with potentially profound socio-economic implications, particularly those that are designed to help improve the lives of “unbanked” refugees, as well as individuals in countries such as Venezuela who might lack access to traditional financial services.
The film primarily chronicles the story of Lauri Love, a British activist and computer scientist who was accused of hacking into computers to steal sensitive data from NASA, the U.S. Army and the Missile Defense Agency. He also faced potential extradition to the U.S. for his alleged involvement in a series of online protests that followed the persecution and untimely death of Aaron Swartz.
Winter has built a name for himself as a director in recent years, even though he is still most widely known as the character Bill from the 1989 comedy cult classic “Bill & Ted’s Excellent Adventure.” Among other projects, Winter directed “Deep Web,” a 2015 documentary about Ross Ulbricht and the Silk Road marketplace. He also directed “Downloaded,” a 2013 look at the file-sharing phenomena.
“I’m not a mathematician, or a cryptographer or a coder. I’m old enough to have totally come from the analog world, but became very involved and interested in the internet and technology in the ’80s,” Winter said. “I came to know a lot of people in that space like the cypherpunk community going back to the ’60s and ’70s, who had been trying to solve the problem that Satoshi, whoever Satoshi is, solved. I understood what the problem and solution were before I understood it as this thing called blockchain.”
Winter said he was motivated to focus on Love because he likes to make films about people, but also about technology. “I think it creates a human face of the technological era we’re in, which is very paradoxical,” he explained. “Love really represents the cypherpunks of today. He’s brilliant, he’s contradictory, he’s contentious, he’s not an easy pill to swallow. You may not like him — it’s a question of how you respond to someone like that.”
“Trust Machine: The Story of Blockchain” was co-produced by Singulardtv, Trouper Productions and Futurism Studios.
Are you planning to go see this movie? Share your thoughts in the comments section below.
Images courtesy of Shutterstock.
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On Wednesday, September 19, a team of developers launched a platform called the Open Savings Initiative. The application allows any Bitcoin Cash (BCH) and Bitcoin Core (BTC) user to save funds in a time-locked address that cannot be spent until a specific date and time has passed.
Open Savings Initiative Allows Bitcoin Users to Lock Funds Until a Specific Time
There’s a new platform that allows people to save BCH and BTC in a time-locked address making the funds unspendable until a specific time. The Open Savings Initiative (OSI) is an open source application that uses the opcode OP_checklocktimeverify to build a custom pay-to-script-hash (P2SH) address. The coins held inside the address cannot be spent until the predetermined timestamp with the lock-time parameter is met. So essentially a user who wants to give 1,000 BCH to their son on his tenth birthday but wants to lock up the funds until he turns 21 can do so using the OSI platform.
“We just launched this open source initiative to offer anyone in the world a secure, time locked and trustless savings account,” explains the project’s creators.
We coded up this application in the hope that ALL the wallets in the Bitcoin Cash / Bitcoin Core ecosystems adopt this feature, either by leveraging our code or implementing it themselves.
Securely Locking up Funds on the Blockchain Without a Custodian
Both the BCH and BTC communities seemed to like the idea when the project’s creators announced the OSI on each forum. According to the announcement, the platform was created by Factom’s David Johnston, the Prestige IT team, Ransom Christofferson, and with guidance from Yeoman’s Capital. Johnston also says the project was funded by a donation from Ricardo Jimenezh and the OSI project is a “dream come true.”
“Ever since I joined the bitcoin community in 2012 I’ve seen crypto as the ultimate savings account. One protected from inflation and built on free market & sound money principals,” Johnston emphasizes. “I dreamed of crypto providing a real alternative to centralized systems such as social security which many rely on for longterm, time-locked income, in old age.
However before that could happen we needed a way to remove the temptation to spend the crypto funds before a future date. Thanks to the “nlocktime” parameter and scripts such a “OP_checklocktimeverify” being introduced into Bitcoin and continued on Bitcoin Cash, there is now a straightforward way of securely locking up funds on the blockchain without a custodian, which can only be spent at a future date.
OP_checklocktimeverify and nlocktime have always been in the BCH and BTC codebase, but OSI now makes it easier for any random person to use. The concept allows people to create a decentralized trust fund that cannot be spent until a certain time, but more importantly, without the need for a third party to unlock and distribute the funds. Moreover, the Open Savings Initiative gives a step-by-step walkthrough on how the platform works and how the opcode OP_checklocktimeverify is used. Johnston recommends people test out the platform and report any bugs on the project’s Github repository.
There is one thing to consider when creating time-locked bitcoin addresses — the issue of forks or blockchain splits. During the announcement earlier today, one Reddit user named r/jaimewarlock said there’s “a particular danger that should be mentioned when it comes to time-locked addresses.” People may have issues trying to spend the coins in a time-locked address on one side of a fork. Jaimewarlock says he had a hard time when he had to split BTC for BCH and for BTG as well and was forced to create his own tool.
What do you think about the Open Savings Initiative? Let us know what you think in the comment section below.
Disclaimer: Readers should do their own due diligence before taking any actions related to the mentioned company or any of its affiliates or services. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
Images via Shutterstock, Pixabay, and OSI.
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The post New App Allows Users to Create a Custodian-Free Bitcoin Trust appeared first on Bitcoin News.
Josh Gordon is reacting to reports he’s being shipped out of Cleveland for “breaking the team’s trust” — and he ain’t exactly broken up about it. The Browns announced on Saturday they’re moving on from the troubled WR after he injured his hamstring…
A Canadian regulated bitcoin trust has achieved the mutual fund trust status, allowing eligible investors to invest in the trust through government-sponsored tax-efficient investment plans. The investment is approved by the Ontario Securities Commission and the British Columbia Securities Commission.
Mutual Fund Trust Status
First Block Capital Inc. announced on Monday, September 10, that its flagship product, the FBC Bitcoin Trust, “has now achieved mutual fund trust status.”
As such, the trust has become the “first and only” investment product approved by the Ontario Securities Commission (OSC) and the British Columbia Securities Commission (BCSC) to offer “unit holders the exclusive opportunity to hold units of a bitcoin investment in their Tax Free Savings Accounts (TFSA) and Registered Retirement Savings Plans (RRSP).”
Noting that the investment is available only to accredited investors, the firm explained:
The trust units are [now] considered a qualified investment for a mutual fund trust under the Tax Act, having exceeded 150 unit holders within one year of launching.
The firm describes itself as “Canada’s first fully registered, dedicated cryptocurrency and blockchain investment company” that holds exempt market dealer (EMD), portfolio manager (PM) and investment fund manager (IFM) licenses. Its co-founder and chief investment officer, Marc van der Chijs, detailed:
Our goal is to make investments in the digital currency asset class more accessible and we are one step closer to achieving this goal by allowing unit holders to place units in government sponsored tax efficient vehicles, and by providing daily liquidity.
Two More Funds Coming Soon
In addition to the bitcoin trust, the firm plans to launch two investment products. The company’s funds are kept in Xapo’s cold-storage vault.
The first of the two is the Active Blockchain Opportunities ETF which is “an actively managed ETF dedicated to uncovering the best companies exposed to this global secular theme,” the firm describes.
The other product is the Cryptocurrency Index Fund that tracks the performance of tokens selected by the firm’s management team. The company explains, “The evaluation of selecting a token into our index fund is mainly determined by the development of its technology, market capitalization, and market liquidity. The goal is to provide investors with a transparent benchmark in this new asset class.”
What do you think of this bitcoin trust? Let us know in the comments section below.
Images courtesy of Shutterstock and First Block Capital Inc.
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North Korean leader Kim Jong Un has “unwavering trust for President Trump” and wants to achieve the denuclearization of the Korean Peninsula before the US leader finishes his term, South Korean officials said Thursday.
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