Fixed-Price Crypto Coins: Holding Hidden Risks?
Tether (USDT)coins may have a bad reputation - and yet the idea of a crypto coin with its value fixed to a "real-world" asset has been making the rounds since the beginning of crypto coins.
And there have been options before, with various mechanisms of fixing the price. Here some options beyond USDT for storing value in crypto coins.
Dollar-Pegged Coins
Theoretically Possible Assets
Basecoin: A still-hypothetical crypto asset, promising an "algorithmic central bank". The coin's supply would be manipulated to affect prices, but by a transparent algorithmic mechanism. The asset is still not traded and does not reveal any information, as for now the pegged value and the potential for a price stability mechanism are just theoretical. Fedcoin is a similar theoretical opportunity.
Digix DAO: The coin, pegged to gold, does not exist yet, but it managed to lift the fortunes of the Digix project. In the recent market slide, even just the promise of a gold-pegged coin lifted the price of DGD beyond $500. More will be known as the coin is issued, pegged to one gram of gold.
Gold-Backed Coins
GoldMint is another coin with a relatively stable price at between $2 and $3, but this asset is just out of the ICO and will have to prove its mettle, as it relies on Bancor and YoBit for its price. GoldMint will also have to prove that its mechanism of buying physical gold or ETF-traded gold will be sufficient to control the price of the asset.
There are constantly new coins appearing promising some form of stability. In the case of Steem Dollars (SBD), the price pegging mechanism was abandoned and the asset was left to appreciate to as much as $10.
Royal Mint Gold, or RMG, the asset promised to be backed by the Bank of England, has yet to establish itself among the crypto community.
"KYC checks (Knowing Your Customers) will be an important part of the RMG sign up process. BitGo to Use Civic ID Service for Royal Mint's Digital Gold Trialhttps://t.co/KxTk5dacBL— RoyalMintGold (@RoyalMintGold)February 10, 2018"
KYC checks (Knowing Your Customers) will be an important part of the RMG sign up process. BitGo to Use Civic ID Service for Royal Mint's Digital Gold Trialhttps://t.co/KxTk5dacBL
Additionally, this official coin would lack the privacy and immediacy of similar assets. The project has also spoken harshly of Bitcoin, and seems to be set against the spirit of the crypto community.
The trouble with fixed-price tokens is that the mechanisms used to control the price may backfire, in the end creating more losses. Additionally, it is hard to move out of the token, which does not fluctuate, but also cannot be easily changed back to other assets. And for most fixed-priced tokens, the last few years were a disaster, since we could say they lost all their power against BTC.