What is ‘Stablecoin’ and How It Will Make Global Commerce Easy
In our last article we introduced Everex and the reasons we exist. We want to transform the world economy by giving everyone equal access to the global financial system.
Stablecoins is the foundation of this plan. Let’s go into some more depth about this and how businesses and individuals will use it to send money like never before.
Although there are many Stablecoins issued and in circulation, Everex' focus is only on fiat pegged and fully collateralized monetary instruments, such as USD, EUR, and so forth. Simply put, it is a cashiers check issued in a smart contract on the Ethereum blockchain with indefinite forward feature, where one USDx is always equivalent in value to $1 stored in the custody of licensed financial entity.
How is Currency Pegged to the Blockchain?
Everex partners with licensed financial institutions that provide the infrastructure for Stablecoins issuance and distribution. These include commercial and investment banks, insurance companies, brokerage houses, and other financial players. Any underlying reserve amount held in one of these accounts is underwritten by the respective institution, and can be verified and audited to prove it exists.
We then use the technology we’ve developed to create equivalent currency units (eFiat) on Ethereum, the global smart contracts enabled blockchain. eFiat can be sent almost instantly anywhere in the world and confirmed by Ethereum miners.
In the future, using SmartMatch exchange, users will swap one currency for another directly with each other easily, meaning (for example) a customer in Thailand could use their THBx (Thai Baht) to buy a product from a company in Japan — which can receive the amount in its local currency equivalent, JPYx, at near interchange bank rate. The process, including the currency conversion, is seamless and nearly-instant.
To put it another way, it’s like PayPal… without the PayPal!
How Do Users Trade In and Out of Stablecoins?
Everex is creating the environment where anyone may walk into a currency exchanger, bank branch or other authorized agent, and hand over cash in exchange for the equivalent amount in Stablecoins. This is similar to a traveler’s check purchase — only the exchange agent will transfer Stablecoin to the user wallet with the Everex transfer app, instead of handling a paper check.
We’re already working with banks, and have received lots of interest from FX brokerages and money transfer organizations (MTOs) about becoming Stablecoins issuers/underwriters.
These agents may set their fees to provide this service. They are able to set their respective conditions and compete with each other in an open market.
To trade back into regular cash, the process is the same.
Ultimately, we expect people won’t trade back into cash. Like other financial technology, this will take some getting used to. Back in the 1990s, people didn’t feel comfortable giving their credit card numbers to online retailers, or leaving large balances on payment processor accounts like PayPal. Less than 20 years later, they realize it’s much easier to just leave their money (and account information) online so they can send it anywhere, anytime, in any currency. Stablecoin is actually far more secure than that.
Where Stablecoin is Applied
The primary applications would be global remittances and online payments. However, we see this instrument as a part of a much bigger picture. With Stablecoins issued and circulated around the world, 2.5 billion unbanked users will receive access to financial markets and credit lines, can conduct their businesses more efficiently, global crowdfunding campaigns can be launched and implemented with much higher outreach and transparency.
Verifiable and Auditable
Transparency and liquidity are fundamental to Stablecoins. The system is open for all global licensed financial entities capable of accepting deposits and making payments to third parties.
To learn more, visit the company website and feel free to discuss your thoughts and ideas on our Facebook page.