Peter Thiel Lends Support to ‘Reserve’ Stablecoin
The emergence of a new stable token commonly called Reserve has met with considerable support from notable players including some angel investors and funds. It is estimated that about 40 other groups have thrown their weight behind Reserve. The latest to have backed the new stablecoin is the Billionaire Coinbase and Silicon Valley investor Peter Thiel. Reserves first round of funding brought in $5 million.
Stablecoin is at the early stage of its development and is at present being worked on by a team comprising 20 persons including OpenAI and Google veterans. Patomak Global Advisors, led by Paul Atkins, a former SEC Commissioner are involved in an advisory capacity. Reports indicate that stablecoin is at present pegged 1:1 to the value of the US dollar (USD).
Price volatility of the digital currency market is considered by many analysts to be one of the major drawbacks to the quest for the wide adoption of cryptocurrencies in day to day business transactions. It is thus considered by some that cryptocurrency lacks the capacity for value storage, payment for products and services and other transactions such as offering credit loans. However, for cryptocurrency investors, price volatility can sometimes work in their favour, especially when price hikes are experienced; this of cause translates into more profits for such investors.
Amidst competition from several stablecoins, Tether has managed to maintain its dominance for a quite a while now. It has maintained its edge over other players despite it being controversy-ridden, including lingering skepticism about it being backed by fiat collateral.
A new entrant into the fiat-backed stablecoin space TrueUSD is reported to be making significant inroads into the market. Another stablecoin worth the mention is eUSD from Havven. Reserve is also prepping itself to make a mark in the fiat-pegged asset space.
More than a stablecoin
Reserve, though primarily a stablecoin, is said to be more than a stablecoin. Why so? According Conor Maloney, an ICO writing consultant at The Written Craft content service,
Freeman, founder of Reserve has noted that “Reserve is a full stack open currency that is relatively stable in purchasing power and private in limited amounts.”
The team working on Reserve has also stated that that the new stablecoin will be ‘decentralized with both external and self-generated backing.’ Some sort of a hybrid approach is intended. In this instance, there is a fine blend between Reserve shares and crypto-assets that are external, the former functioning like segniorage shares as prevails in Basis and Carbon.
Crypto-backing allows for full transparency as users can verify that the funds really are in place backing their stablecoin tokens, and also allows for decentralization. Freeman reportedly told CCN: “We think that for a cryptocurrency to be truly censorship-resistant in the long term, it has to be decentralized.”
When a question was put to Freeman about the possible risks associated with this method, he admitted thus: “There is still a tail-risk that in a black swan event these assets could lose nearly all of their value, and that’s why we aim to create a diversified pool through securitized assets.”
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