Welcome to Chain Letter! Great to have you. Here’s what’s new in the world of blockchains and cryptocurrencies. | | Under construction: a bridge to money’s future. Cameron and Tyler Winklevoss are again making crypto headlines, this time for launching their own “regulated stablecoin.” The Gemini dollar is an Ethereum-based crypto-token meant to be pegged to the US dollar. Gemini exchange account holders can convert US dollars to the new tokens, which can be sent to Ethereum addresses or converted back into dollars. The twins promise not only that each circulating Gemini dollar will be backed by a real dollar in a bank deposit, but also that the deposit will be “examined monthly by an independent registered public accounting firm to verify the 1:1 peg.” Perhaps most importantly, it has earned the blessing of the New York Department of Financial Services.
The Winklevosses’ new coin enters an already crowded and noisy field. The appeal of stabelcoins is written right into their name: cryptocurrencies are nothing if not volatile, and pegging tokens to fiat currency means investors can switch from other crypto assets into something they know won’t crater in value. They’re generally thought of as a way for people to consolidate gains after a rise in crypto prices, but they could also make cryptocurrency a more useful store of value and form of payment. The idea has caught on. Gemini wasn’t even the only dollar-pegged token to launch yesterday—the blockchain startup Paxos announced its own Ethereum-based token, which will follow a similar model. Both of those coins, which are fully and transparently collateralized, are a far cry from the most popular stablecoin, Tether, which hasn’t yet been proven to be fully backed. They are also distinct from number of other well-funded projects that are not backed by fiat money and instead use complicated algorithmic schemes to maintain their pegs (See: “Stablecoins are trending,” but they may ignore basic economics”)
In a field where so many observers and enthusiasts are hyper-focused on short-term price movements, the Winklevoss twins are looking toward the long-term. They’ve built a popular, regulated exchange, and are creating a self-regulating organization meant to stamp out the kinds of shady industry practices that have kept regulators skeptical and institutional investors on the sidelines. They’re exploring new technical approaches to securely storing cryptographic keys. The Gemini dollar, they say, will give fiat currency “the same desirable technological qualities of cryptocurrencies,” and bring them closer to accomplishing their stated mission: to “build a bridge to the future of money.” | | Is the blockchain space really nearing its “ceiling”? Ethereum creator Vitalik Buterin apparently thinks so. Much of the growth we’ve seen in the past few years has been spurred by marketing efforts aimed at getting wider adoption, but that strategy is starting to run out of gas, Buterin recently told Bloomberg. “If you talk to the average educated person at this point, they probably have heard of blockchain at least once. There isn’t an opportunity for yet another 1,000-times growth in anything in the space anymore,” he said. Now it’s time to “go from just people being interested to real applications of real economic activity,” he added. But there’s no telling how long that might take, and in the meantime the market seems impatient. Crypto prices have continued to tumble this week, led by Ethereum’s cryptocurrency, ether, whose price has fallen nearly 85 percent since it peaked in January. | | Loose Change Fill your pockets with these newsy tidbits. | | | The US SEC has suspended two trading products, one Bitcoin-related and the other Ethereum-related, that are listed as exchange-traded funds (ETFs) on the Stockholm Stock Exchange. (CNBC) | | | | Ripple’s general counsel has left the company. (Quartz) | | | | WeChat has apparently begun blocking Bitmain’s sales channel, as well as accounts that offer cryptocurrency price predictions. (CoinDesk) | | | | Only one digital currency has seen big gains during the past month: Dogecoin, which was originally launched as a joke. (Bloomberg) | | | | China’s supreme court has ruled that blockchain-based evidence is legally binding. (ETHNews) | | | The Money Quote “When we started a few years ago, our customers were not ready for a public network. Fast forward three years, they’re willingness has gone up, and the maturity of the public networks has changed a lot.” —Adam Ludwin, CEO of Chain, which has been acquired by Lightyear Corporation, a for-profit entity focused on developing the Stellar blockchain. (Reuters) | | | |
