You have heard about Bitcoin, Ethereum, and thousands of other cryptocurrencies. A lot of us talk about how the price of cryptocurrencies are not stable and how it fluctuates every day, if not every minute. 2018 was the year for stablecoins and it seems like that is continuing.
A lot of investors and speculators were looking for a way to “park” their crypto holdings without converting to dollar/s in order to avoid taxes on capital gains. It worked for some investors until crypto to crypto conversions are taxed in countries like the U.S. However, stablecoins like Tether and MakerDao have been used beyond “saving us from crypto taxes,” but also to store wealth(value), without having to worry about the fluctuation in price.
What are stablecoins?
Stablecoins are a type of cryptocurrency that have their value pegged to another asset like fiat currencies, such as the United States dollar, other cryptocurrencies, precious metals or commodities. Fiat seems to be the most popular option in the marketplace right now, meaning one unit of a stablecoin equals $1.
Before I talk about Reserve Protocol, a stablecoin we believe is truly decentralized, we should mention what is happening in countries like South Sudan, Zimbabwe, Argentina, Turkey, and Brazil.
What is happening in those countries?
A lot of people from the middle and poor class (even the upper middle class, in a lot of cases) are losing the wealth they stored for decades in a matter of months to a few years due to poor economic performance and hyperinflation.
Their economy is failing day by day, but it is the individuals who are paying the price. How? Imagine if you can buy milk just for $3 (in your local currency) but next month the cost of milk rises to $4. That is a ~34% increase in just a month.
What if such price effect is happening in every industry and every commodity in your country?
The meat you eat, the tomatoes you use for your salad, and even the sugar you use for your cup of tea are all rise up in price. You basically lose the wealth you have saved in your currency. Your currency power to buy everyday goods becomes weaker.
It is even more scary to think that these people don’t usually have the power to protect themselves from currency depreciation, as they just don’t have the opportunity to buy foreign stable currency.
YES, that is what is happening in a lot of countries in Africa, Latin America, and even Europe. What if there is a currency that can save you from losing your wealth? That is where Reserve Protocol comes in.
Introducing Reserve Protocol, the stable currency that is pegged to the dollar and soon to other assets, possibly including treasury bills, bonds, etc. At Reserve we are excited to work with a team of entrepreneurs who are working to protect YOUR money.
We are also backed by the most successful Silicon Valley investors and companies including but not limited to PayPal founder Peter Thiel, YCombinator president Sam Altman, and Coinbase Ventures.
“With millions of financially displaced people watching helplessly as their wealth evaporates by the day, stablecoins can empower inflation-ravaged populations with the monetary constancy of the developed world. In distressed economies, stablecoins enable citizens to seamlessly migrate their wealth and savings into asset-backed digital currency accessible on their mobile phones.
Circumventing transaction monitoring by local banks, a widely adopted stablecoin ecosystem disables the financial surveillance capabilities of corrupt regimes. With a skillfully deployed stablecoin, people and businesses can transact peer-to-peer, using electronic money with more intrinsic and predictable value than their distressed local currencies.” ~Robb Henshaw, Reserve Advisor.
How does it work in simple terms?
Reserve Protocol uses an app that connects to the blockchain which, through a smart contract, keeps price of RSV(our stablecoin) token pegged to a dollar. An end user that is willing to exchange his money for a stablecoin just logs into the app and via pressing a few buttons gets RSV tokens for his national currency.
As RSV price is always stable, an individual is protected from all of the price movements and other inflation-related problems. When users want to spend their money to buy something, he or she can easily exchange RSV back to the national currency.
We are very excited that we will soon launch our mobile app to help you purchase Reserve dollars in the African continent. We have launched a bounty program to reward early adopters like you with Reserve tokens that are worth $500 in total.