Jared Tate, the founder of DigiByte, announced yesterday the launch of the DigiDollar project, a new stablecoin pegged to the US dollar.
So its time we make the DigiDollar. A USD stablecoin lauched on the #DigiByte Blockchain. All these other stable coins are launched on very insecure centralized networks. Total junk.
— Jared Tate (@jaredctate) December 26, 2019
All stablecoins adhere to a similar principle, which is to have a collateral composed of several fiats or other assets that are usually kept in dedicated bank accounts.
And this is where the solution of the founder of Digibyte comes into play: the novelty of this stablecoin consists in having the collateral deposited directly in the bank of the user and, through a dedicated smart contract that calls the API of the account, it is possible to see the balance of the stablecoin in real-time.
The system would be based on a PoR (Proof of Reserve) type consensus allowing to hold the assets only in the event that these are actually held in the bank, something that, among other things, would decentralise both the distribution of the tokens and the management of the funds related to their underlying.
Jared Tate himself, however, is critical of this system, attempting to anticipate questions from users, such as: for example:
- Banks can turn off APIs for this type of service and thus make the system inefficient: one solution would be cooperation with American institutions;
- As for the KYC (Know Your Customer) and AML (Anti Money Laundering) issues, this would be solved upstream since the users have already given all the documents to the bank to verify their account.
The intentions of Digibyte’s founder are very clear: to decentralise stablecoins on both the issuer and user side, allowing everyone to create their own stablecoin from their own deposits.
This would certainly represent an interesting project for the DigiByte blockchain but it could raise many problems for traditional stablecoins which are often criticised for their centralisation.