{"version":"https://jsonfeed.org/version/1.1","title":"Stephen Ajulu","home_page_url":"https://ajulu.netlify.app/","feed_url":"https://ajulu.netlify.app/tags/stablecoin/feed.json","description":"Hello, I'm Stephen Ajulu, a seasoned multidisciplinary tech professional with over a decade of experience. I build impactful solutions using design, tech, and engineering in the pursuit of impact.","icon":"https://ajulu.netlify.app/images/me.jpg","authors":[{"name":"Stephen Ajulu","url":"https://stephenajulu.com","avatar":"https://ajulu.netlify.app/images/me.jpg"}],"items":[{"id":"https://ajulu.netlify.app/posts/what-are-stable-coins/","url":"https://ajulu.netlify.app/posts/what-are-stable-coins/","title":"What is a Stable Coin?","summary":"A “stablecoin” is a type of cryptocurrency whose value is pegged to another asset class, such as a fiat currency or gold, to stabilize its price.\nCryptocurrencies such as bitcoin and ether offer a number of benefits, and one of the most fundamental is not requiring trust in an intermediary institution to send payments, which opens up their use to anyone around the globe. But one key drawback is that cryptocurrencies\u0026rsquo; prices are unpredictable and have a tendency to fluctuate, often wildly.\n","content_html":"\u003cp\u003eA “stablecoin” is a type of cryptocurrency whose value is pegged to another asset class, such as a fiat currency or gold, to stabilize its price.\u003c/p\u003e\n\u003cp\u003eCryptocurrencies such as bitcoin and ether offer a number of benefits, and one of the most fundamental is not requiring trust in an intermediary institution to send payments, which opens up their use to anyone around the globe. But one key drawback is that cryptocurrencies\u0026rsquo; prices are unpredictable and have a tendency to fluctuate, often wildly.\u003c/p\u003e\n\u003cp\u003eThis makes them hard for everyday people to use. Generally, people expect to be able to know how much their money will be worth a week from now, both for their security and their livelihood.\u003c/p\u003e\n\u003cp\u003eCryptocurrency\u0026rsquo;s unpredictability comes in contrast to the generally stable prices of fiat money, such as U.S. dollars, or other assets, such as gold. Values of currencies like the dollar do change gradually over time, but the day-to-day changes are often more drastic for cryptocurrencies, which rise and fall in value regularly.\u003c/p\u003e\n\u003ch3 id=\"stablecoins-in-a-nutshell\"\u003eStablecoins in a nutshell\u003c/h3\u003e\n\u003cp\u003eStablecoins try to tackle price fluctuations by tying the value of cryptocurrencies to other more stable assets – usually fiat currencies. Fiat is the government-issued currency we\u0026rsquo;re all used to using on a day-to-day basis, such as dollars or euros.\u003c/p\u003e\n\u003cp\u003eUsually, the entity behind a stablecoin will set up a \u0026ldquo;reserve\u0026rdquo; where it securely stores the asset or basket of assets backing the stablecoin – for example, $1 million in an old-fashioned bank (the kind with branches and tellers and ATMs in the lobby) to back up one million units of a stablecoin.\u003c/p\u003e\n\u003cp\u003eThis is one-way digital stablecoins are pegged to real-world assets. The money in the reserve serves as collateral for the stablecoin – meaning whenever a stablecoin holder wishes to cash out their tokens, an equal amount of whichever asset backs it is taken from the reserve.\u003c/p\u003e\n\u003cp\u003eThere is a more complex type of stablecoin that is collateralized by other cryptocurrencies rather than fiat yet still is engineered to track a mainstream asset like the dollar.\u003c/p\u003e\n\u003ch3 id=\"types-of-stablecoin-collateral\"\u003eTypes of stablecoin collateral\u003c/h3\u003e\n\u003cp\u003eUsing this framework, stablecoins come in a range of flavors, and the collateralized stablecoins use a variety of types of assets as backing:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003e\u003cstrong\u003eFiat\u003c/strong\u003e: Fiat is the most common collateral for stablecoins. The U.S. dollar is the most popular among fiat currencies, but companies are exploring stablecoins pegged to other fiat currencies as well, such as \u003ca href=\"https://www.coindesk.com/learn/what-is-a-stablecoin/\"\u003eBiLira\u003c/a\u003e, which is pegged to the Turkish lira.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003ePrecious metals\u003c/strong\u003e: Some cryptocurrencies are tied to the value of precious metals such as gold or silver.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eCryptocurrencies\u003c/strong\u003e: Some stablecoins even use other cryptocurrencies, such as\u003ca href=\"https://www.coindesk.com/learn/what-is-a-stablecoin/\"\u003e ether\u003c/a\u003e, the native token of the Ethereum network, as collateral.\u003c/li\u003e\n\u003cli\u003e\u003cstrong\u003eOther investments:\u003c/strong\u003e Tether’s \u003ca href=\"https://www.coindesk.com/learn/what-is-a-stablecoin/\"\u003eUSDT\u003c/a\u003e was once supposed to be backed 1-for-1 with dollars but its collateral mix has shifted over time and in a breakdown provided in 2021 the company said nearly half its reserves are in \u003ca href=\"https://www.coindesk.com/learn/what-is-a-stablecoin/\"\u003ecommercial paper,\u003c/a\u003e a form of short-term corporate debt. It has not disclosed the issuers of this paper but \u003ca href=\"https://stuarthoegner.medium.com/tether-is-setting-a-new-standard-for-transparency-and-responding-to-criticism-that-is-fc130e08319b\"\u003eclaims\u003c/a\u003e it is all rated A-2 or higher (A-2 is the second-best grade available for a corporate borrower from credit rating agencies like Standard \u0026amp; Poor’s). Circle’s \u003ca href=\"https://www.coindesk.com/learn/what-is-a-stablecoin/\"\u003eUSDC\u003c/a\u003e, similarly, lists unspecified “approved investments” alongside accounts at federally insured banks (notably, it does not say whether the accounts themselves are insured) in its monthly \u003ca href=\"https://f.hubspotusercontent00.net/hubfs/6778953/USDCAttestationReports/2021-Circle-internet-financial-attestation-april-2021.pdf\"\u003edisclosures\u003c/a\u003e.\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3 id=\"popular-stablecoins\"\u003ePopular Stablecoins\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003eTether(USDT)\u003c/li\u003e\n\u003cli\u003eUSD Coin(USDC)\u003c/li\u003e\n\u003cli\u003eBinance USD(BUSD)\u003c/li\u003e\n\u003cli\u003eTerra USD(UST)\u003c/li\u003e\n\u003cli\u003eDai(DAI)\u003c/li\u003e\n\u003c/ul\u003e\n","date_published":"2021-12-10T14:20:00+03:00","image":"https://ajulu.netlify.app/images/597b2c80-707d-439c-a801-374b634c033e_what-is-a-stablecoin-article-main.jpg","tags":["technology","finance","cryptocurrency","cryptocurrencies","stablecoin","stablecoins"]},{"id":"https://ajulu.netlify.app/posts/what-are-cbdcs-why-countries-are-exploring-and-creating-their-own-central-bank-digital-currency/","url":"https://ajulu.netlify.app/posts/what-are-cbdcs-why-countries-are-exploring-and-creating-their-own-central-bank-digital-currency/","title":"What are CBDCs? Central Bank Digital Currency Defined","summary":"The future is digital and virtual.\nCBDC stands for “central bank digital currency,” a new type of currency that governments around the world are experimenting with. What sets a CBDC apart from established currencies is that proponents hope it can use new payment technology, typically a blockchain, to potentially increase payment efficiency and lower costs.\nThis new type of currency is still early in its development. Most countries are still only starting to explore the idea, such as the U.S. form of a digital dollar. A few ambitious countries, including China with its digital yuan, South Korea, and Nigeria with eNaira, have already finished a demo and are piloting the technology. But a CBDC has yet to be deployed on a large scale.\n","content_html":"\u003cp\u003eThe future is digital and virtual.\u003c/p\u003e\n\u003cp\u003eCBDC stands for “central bank digital currency,” a new type of currency that governments around the world are experimenting with. What sets a CBDC apart from established currencies is that proponents hope it can use new payment technology, typically a blockchain, to potentially increase payment efficiency and lower costs.\u003c/p\u003e\n\u003cp\u003eThis new type of currency is still early in its development. Most countries are still only starting to explore the idea, such as the U.S. form of a digital dollar. A few ambitious countries, including China with its \u003ca href=\"https://www.reuters.com/technology/95-billion-spent-using-chinese-central-banks-digital-currency-official-2021-11-03/\"\u003edigital yuan\u003c/a\u003e, South Korea, and Nigeria with \u003ca href=\"https://enaira.gov.ng/\"\u003eeNaira\u003c/a\u003e, have already finished a demo and are piloting the technology. But a CBDC has yet to be deployed on a large scale.\u003c/p\u003e\n\u003cp\u003eEach country exploring a CBDC has its own approach. Several CBDCs are based on the same general principles and blockchain technology underlying Bitcoin, the original cryptocurrency.\u003c/p\u003e\n\u003cp\u003eBlockchain technology allows many different entities to hold a copy of a history of transactions so that history is distributed and not controlled by a single entity.\u003c/p\u003e\n\u003cp\u003eSeveral countries are known to be experimenting with blockchain-inspired CBDCs. Venezuela was a pioneer in this respect, launching its own cryptocurrency, the petro, in 2018. However, the petro is plagued by problems and very few Venezuelans actually use it. Besides Venezuela, the Chinese government is probably the furthest along in creating a CBDC. It is already trialing a digital yuan across several cities. The U.S. Federal Reserve Bank of Boston is collaborating with the prestigious Massachusetts Institute of Technology (MIT) to experiment with a digital dollar as well. \u003ca href=\"https://kenyanwallstreet.com/kenya-explores-central-bank-digital-currency-for-cross-border-payments/\"\u003eKenya has expressed interest in creating its own.\u003c/a\u003e\u003c/p\u003e\n","date_published":"2021-12-09T12:31:00+03:00","image":"https://ajulu.netlify.app/images/cbdc.jpeg","tags":["technology","finance","cbdc","central bank","central banks","central bank digital currency","stablecoin","digital currency"]}]}