Stablecoins for everyone! The future of money is here.Posted by Eric Kryski on May 17th, 2019
Wrapping up our blog post series dubbed #StableCoinWeek, we are very excited to announce that we are the first platform in the world to support TrustToken's newest stable coins - TrueAUD, TrueGBP, and TrueCAD.
Starting today, low cost stable coin payments are available from all corners of the globe and we support more stable coins than any other platform on the planet. 🌎
What does that even mean?
This means that any individual or business can accept secure low-cost payments from someone in the same room or across the planet in either USD, CAD, GBP and AUD. This now enables global payments:
- Without the risk of fraud or chargebacks; 🔒
- Without the need to set up bank accounts for each currency; 😅
- Without the accounting headache of managing all those currencies and FX rates on the books; 💸
You get all this for less than half the cost of PayPal or credit card payments. If you are selling goods and services you can now sell anywhere in the world you can ship your products. This not only removes risk and accounting headaches, but transactions take less than a minute and cost pennies, no matter the amount that is being paid! 🤯
If you were to compare that to other payment methods it would look like this:
|Payment Method||Cost To You||Cost To Sender||Time to Process||Transparency|
|Wire||$15 - $50 + 💩 FX rate||$15 - $50 + 💩 FX rate||1 - 5 business days||None|
|PayPal||2.9% + $0.30 + 3% FX rate||💩 FX rate||< 1 minute||Partial|
|Credit Card||2.9% + $0.30 + 3% FX rate||💩 FX rate||< 1 minute||Partial|
|Bidali||1.25% + fair FX rate||About $0.02||< 1 minute||Full|
If you'd like to accept these next generation payments you can sign up here. Getting set up takes just a few minutes.
Now you might be asking yourself, "what are stable coins anyway?"
They are the future of money. In essence a stable coin is a cryptocurrency that brings the security, transparency and efficiency benefits of cryptocurrency (ie. "secure programmable money") without the volatility that has plagued cryptocurrencies to date.
If that's too much to handle, you can think of them as more secure digital dollars that have super powers. 🧙♀️
They typically come in 3 flavours:
1. Fiat backed.
Fiat backed stable coins are where a custodian is holding fiat collateral in USD, CAD, EUR, etc. one-for-one to the stable coin. These are effectively digital dollars that are a great step towards unlocking the benefits that come along with cryptocurrency - programmable money, easier to transfer, lower fees, faster.
Fiat currency is government issued currency. It is what is considered legal money where you live.
2. Asset backed.
These are stable coins that may be backed by another asset such as precious metals, real-estate, other monetary instruments, etc. The intention is to have their value pegged to a fiat currency based on the price of the underlying collateral.
These are the most experimental stable coins but the most innovative. The idea here is that you use fancy math - inflation rates, collateral ratios and interest rates to control supply and demand to keep the stable coin pegged to a stable value (in most cases USD). This is more or less how government fiat money is controlled. However, the difference here is software (ie. smart contracts) and the participants in the network control these variables instead of high paid politicians or the federal reserve. The best example of this is Maker's DAI.
What do you mean by "programmable money"?
When I refer to the term "programmable money" I mean that because these digital currencies are now using a common, open, global protocol they are much easier to move around using software. This makes it easier to:
- Detect when payment has actually been made;
- Automate and reduce friction (and fees) when clearing payments;
- Reduce fraud and compliance costs;
- Work with parties all over the place;
- Bring in new parties to the network that might otherwise not be able to participate;
This brings massive efficiency gains, reduces costs, reduces counter-party risk, and creates better global liquidity.
Don't systems already work this way?
Yes and no.
Today, most money is digital. It's just a bunch of numbers in various databases (both private and shared) at financial institutions, payments companies, clearing houses, etc. So in that case it is very similar. However, the problem with this is because there are many different software systems and programming languages used at all these different companies, some of which are decades old, not everything works well together.
Humans are inventive and have managed to use the equivalent of shoestring and duct tape to patch all these systems together but it's definitely not as efficient and secure as it could be. There are tons of middlemen taking a cut and lots of hiccups in the system as all these private and shared databases try to stay in sync around who owes who what. In many cases wire transfers are still manually entered into computer systems by thousands of people around the world every day. Obviously this is prone to human error, corruption and system failures.
Many people don't even realize that credit card transactions, while looking relatively quick to the consumer and merchant, go through automated clearly houses that take hours or days to move batches of money around. Especially in the case of international payments. So depending on who your payment processor is and where you are located in the world, a merchant may not be actually paid for your credit card transaction for 1 - 30 days.
The criticism that blockchains are too slow at this point is a fairly poor argument because it's more about how quickly the customer and merchant perceive the payment to be complete vs. the funds actually being cleared. This is really a user experience and liquidity issue and not a fundamental tech issue. Blockchains are already way ahead of traditional money here. It's just that banks, payment processors and clearing houses have pools of capital they use to keep the flywheel moving faster. As a trade off you trust that they won't screw you over. Most of the time they don't, but sometimes they do. And that's why Bitcoin was invented and why the crypto space is so hot right now.
Who is Trust Token?
TrustToken is a US based company that is focused on tokenizing assets, including money. They are backed by some of the world's best VC funds and have brought together people with technical, legal, and finance expertise from Carnegie Mellon, Stanford, Berkeley, Google, PayPal Microsoft and Goldman Sachs. They are building the technology and banking relationships to tokenize and custody assets.
At Bidali, we are working to make these assets easy to use.
Why does this matter?
The reason this is such a big deal is because moving money around the world today is still pretty inefficient.
Simply put, it's outdated. And it's costly.
This standardization of tokenizing assets (including money) into a common protocol secured by strong cryptography (this is what cryptocurrency is) makes things much more efficient. This "open money system" allows other market participants to participate other than big banks. There are pros and cons to this, but the major benefit is that this can foster rapid innovation and further efficiency gains. Much like we saw with the internet, as a result of it being open and accessible.
There are many things that this technology could do, some of which has yet to be invented. However, even an immediate use case of these newly issued stable coins is to reduce the $30 billion in annual costs associated with cross border remittances and lower cost payments.
We are very proud to be working with the TrustToken team. Our visions are very much aligned around bringing down barriers to global commerce. Their technology and infrastructure combined with Bidali's is the first step towards enabling a frictionless, global economy, where all assets can move anywhere instantaneously, 24/7.
Until next time,
Eric & The Bidali Team
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