In most countries of the world there is no such thing as a stable form of money. Even fiat currencies, such as the US dollar and Euro are subject to fluctuating exchange rates, a decrease in purchasing power and inflation.
In the crypto economy, currencies’ volatility is a thousand times more, which makes them attractive to speculators and impractical for everyday life. But what if all the advantages of cryptocurrencies are combined with a stable exchange rate? This would be an ideal type of cryptocurrency.
There are many projects that try or did try to realize this idea. They are also known as “stable coins”. In its essence, it is a cryptocurrency with a stable price measured in currency.
What are the Properties of Such a Coin?
“Stablecoin” is a crypto currency that can be tied to another stable asset, for example, gold or the US dollar. For all that it is global, it does not depend on any bank and the price volatility is much lower than most crypto currencies. All this will give people a way to their mainstream use.
At the moment, high volatility prevents using crypto currency on a broad scale, because it carries the risk of value loss to the buyer or seller. In addition, the definition of prices for goods and services becomes more complex, as prices fluctuate, making the currency unusable as an accounting unit.
But as soon as such a product is created,a financial revolution will take place in the world.
Bitcoin is currently fluctuating within 5-10% per day. It is too much. For comparison, the daily volatility of gold is about 1.2%, and the exchange rate ranges from 0.5 to 1.0%.
Strategies at the Heart of Stablecoin Projects
Fiat-provided coins. They are attached to the exchange rate of the currency in the ratio of 1:1. This is the simplest way: a fixed amount of a fixed currency is deposited as collateral. But in this approach there is one significant negative moment. It is a centralized issue and there should always be a third side, which provides a guarantee.
For example, Tether is a stablecoin with a 1-to-1 peg against the USD, whereas the conversion rate is 1 Tether USDT equals $1 USD. But many doubt that it is fully secured. Basecoin also pegs their price to $1 USD but is a non-collateralized stablecoin. This approach uses consensus to contract and expand supply of their coin. TrueUSD builds a stable fund with the support of the US dollar, which is 100 percent secured by the dollar, etc.
There are also unsafe stablecoins. In fact, they are not actually supported by anything else than by the expectation that they will retain their value. The basis is the concept of smart contracts, which algorithmically expand and reduce the supply of a stable price.
There is also an opinion that the cryptocurrency, fully backed by US dollar, will become just its derivative. After all, the dollar itself is also unstable and loses its purchasing power.
With this approach, other collateral is also possible, for example gold, silver or oil. This is exactly what can be understood by an ordinary person. Such coins are seen as more reliable. One of such projects is GoldMint.
Reliable Stablecoins Enter the Crypto Landscape
GoldMint is a new Russian-Singaporean company which goal is to introduce a real stable coin into a turbulent crypto world and to bring transparency for the pawnshop industry. GoldMint is a subsidiary of LOT-ZOLOTO, a gold trading company, based in Russia with a turnover of $ 100 million in 2017.
In 2017 GoldMint came up with the initiative to change principles of the pawnshop business. The project plans include: tokenization of physical gold, the release of a robotic machine (Custody Bot) with the function of receiving and evaluating physical gold products, and its connection to the blockchain for storing data.
Just a few months after the ICO in November 2017 the company announced the launch of a 100% backed GOLD asset to the market. The process by which the Singaporeans from Digix took several years, the Russians were able to complete in a short time.
The soon-to-be-released GoldMint blockhain is built on the Sumus solutions with a unique consensus algorithm. In order to save the information on how much gold is used to secure the GOLD coins, where it is located, data on transactions of crypto assets for storing information about borrowed gold in Custody Bot (acceptance time, assessment data, etc.) it is necessary to ensure the possibility of mining (minting).
Custody Bot is a vending machine. It is programmed to accept jewellery, evaluate and store gold pieces, after which all data is uploaded to GoldMint’s blockchain. The information is reliable, human factor is excluded, the costs for product evaluation and the work of pawnshop operators are reduced. Custody bot is supposed to analyze the products and offer a certain amount in GOLD. Coins can either be received at your cryptocurrency wallet or withdrawn in fiat currency through a pawnshop, which in this case will act as an exchanger.
MNTP is a pre-launch token, which runs on the Ethereum blockchain with an overall supply: 10 000 000 MNTP. MNTP will later migrate to MNT (GoldMint Blockchain) tokens to verify transactions of PAWNGOLD. The owner of the MNTP token receives part of this commission fee for storing data and participating in the transaction verification. To do so, the owner of the MNTP token has to increase the master node limit of the GoldMint blockchain (he or she must own at least of 10,000 MNT tokens). The MNTP token also remains within the Ethereum blockchain — 1 MNTP = 1 MNT (a two-way exchange rate will be applied).
With the help of the blockchain technology, GoldMint wants to make pawnshop activities transparent – it is the only way to attract a cheaper financing and give a new breath for this industry. Furthermore Goldmint can provide several ways to earn money for different types of investors: for miners – raise master node and verify txn in our blockchain and get 10%-40% per annum, for conservative investors – invest in Gold coin and get income not only from market price growth, but also 6% per year, as a part of commision that pawn shop pays for getting cheaper financing, for active traders – balance their portfolio by adding Gold coin, hedge their risks and limit potential losses.
The experience and commitment of the team makes no doubt of the success of the project, which, when proves its effectiveness and will be successfully implemented, will become a catalyst for innovations in the cryptosphere and the global financial system.