Using NXT cryptocurrency technology we have launched CoinoUSD – USD-tied cryptoasset which lives on NXT blockchain, here is the link to its NXT Asset Exchange listing: http://nxtreporting.com/?as=12982485703607823902.
Probably some background is needed. As you probably know, cryptocurrency is volatile, this is the direct outcome of its decentralized nature. Bitcoin price is determined through open market trading procedure. Due to the fact that trading volume of BTC is relatively small ,compared to traditional trading instruments, its price can vary 10% per day easily. Many people don’t like this fact, merchant acceptance is also hampered by this, you can’t sell a good for a currency that can lost 20% the next day.
So a lot of thinking was put into figuring out a way to issue a cryptocurrency denominated in fiat money such as USD. To keep its price stable probably some kind of market making is needed (although there are other attempts to tie the price to real life dollar, see below)
I would highlight three major attempts here, they are Ripple, Bitshares, and ours
Ripple is a truly innovative cryptocurrency which combines decentralized nature with centralized gateways, providing access to “real world” money. Gateways accept and pay out fiat money and do the market making on decentralized network.
Another attempt is very recent, it is Bitshares BitUSD. Bitshares is a second generation cryptocurrency which aims at creating decentralized trading of “real life” securities. It is presumed that due to some Bitshares feature called “market peg” the securities on Bitshares blockchain would mirror the parent securities. BitUSD, USD on Bitshares blockchain, has been launched a couple of weeks ago and is quite successful up to now. Although there’s no guarantee that the market peg will hold in future, this is dynamical procedure based on assumption that market participants’ behavior is rational, which probably is not always so.
Let’s turn to our CoinoUSD. Our approach is closer to Ripple, we provide market-making services for CoinoUSD, buying and selling it at Coinomat.com. Once bought, it can be sent as a usual NXT transfer to another account. It also can be traded at NXT Asset exchange against NXT. This is quite important, with CoinoUSD we created first decentralized NXT to USD market!
What else can you do with CoinoUSD? You can deposit it poloniex.com exchange and trade it against Bitcoin, NXT, and Monero cryptocoins: https://poloniex.com/exchange/xusd_btc. Poloniex.com had Bitcoin markets, Monero markets, and now it has CoinoUSD markets (ticker XUSD). Along with creating NXT to USD market we created BTC and other coins to USD market at Poloniex.com.
We hope that other exchanges which don’t have fiat deposits and withdrawals will follow suit. CoinoUSD asset can even be withdrawn to a bank card, so a probable use case would be a user cashing out his trading profits through exchanging it CoinoUSD and withdrawing to his bank card.
I’m sure that other usages for CoinoUSD will appear. It allows to transfer USD money value through cryptocurrency, and it opens up a whole range of new possibilities.
More and more financial transactions will be moving to crypto, appearance of such instruments as CoinoUSD is inevitable and we’re happy to be a part of it.
- Crypto securities experiments go on – decentralized assets at a centralized exchange.
- Decentralized stock exchanges – the future might be closer than we think.