Dollars on BlockChains

leprechaun (56)in #steem • 6 years ago

Dollars on Block Chains

There are four pegged assets in the Blockchain world (in order of appearance):

Nubits
bitUSD
Tether
Steem Dollar

For one reason or another these assets have lost thier 1 to 1 ratio with the USD. For the most part they have kept a close approximation with the USD for most of their history.

NuBits

Nubits is a relatively older currency. It was written based on the bitcoin code base and its blockchain introduced two currencies in one block chain.

One currency is Nushares would allow people to vote on decisions that wouldeffect Nubits. Nubits was to be a fixed to the USD cryptocurrency. There was an elaborate system of liquidy providers that were paid by NuShares collectively to keep the USD-peg with Nubits. As time went on, however important elements were reduced and removed. Nubits lost its peg with the US dollar last year. In fact, I blogged about this. It soon recovered its peg however and today maintains a good approximation to the USD.

I would avoid holding this as the Bitcoin approaches an event like a halving of its reward. NuBit's transaction fees are around five cents.

bitUSD

Seeing a problem with centralized exchanges. The man who would later create the Steem blockchain wrote BitShares. Instead of rewarding those with hardware to mine, the rewards were instead rewarded to those who had bitshares. The Bitshares blockchain allowed creation of new currencies on this blockchain. Users would no longer need to use centralized exchanges. One of these assets was bitUSD. With the exchange in the blockchain itself, the blockchain could be leveraged to back the bitUSD and there was no longer a problem of trusting users to maintain the peg.

Unfortunately, people still use centralized exchanges. You can buy bitUSD on blocktrades.

Tether

Using the Omni protocol, which is a second layer on top of Bitcoin. The Tether asset was issued. A company kept a large amount of Tether and fiat USD in order to act as a bridge from the fiat world to the crypto world. Without any of the volatility of bitcoin. Why not use bitUSD? Well, this way they could issue thier asset (have it secure as thier keys) and not need to actually buy bitUSD.

Earlier this year, they lost control of some of thier Tether sending the Tether price dropping. Pegged currencies not being one that should drop, it thus lost it's peg.

Steem Dollar

The Steem blockchain adds one exceptional change that are not present in any of the blockchains hitherto expressed. All of these altcoins needed transaction fees of some kind. Steem and Steem Backed Dollars do not need transaction fees. The Bitshares community was not interested in adopting a fee-less transaction policy. Many users on Steem may get rewards of one cent, it just was important to have a fixed asset running right inside the Steem blockchain.

At first, the Steem Dollar had a hard time keeping the value of the USD. It was instead around 80 cents. Later it climbed up to one dollar and it seemed like we had a pegged asset that would not fail. First the steak holders that were to support the Steem dollar had to be invested for three months. Bad decisions for the platform would effect the witnesses making them before they could sell out. This dollar would always be convertible to a dollar worth of Steem. However, nobody worried about the Steem dollar exceeding the value of one dollar but it did! And how! Today one Steem dollar sells for 11 USD. You can buy Steem Dollars at Blocktrades, and Bittrex.

@ocd @originalworks @minnowsupport @steemvote @dse @steemero @markboss @steemvote @steemit @fairvote @monitorcap @minnowsunite @steemspeak

Dash XjzjT4mr4f7T3E8G9jQQzozTgA2J1ehMkV
LTC LLXj1ZPQPaBA1LFtoU1Gkvu5ZrxYzeLGKt
BitcoinCash 1KVqnW7wZwn2cWbrXmSxsrzqYVC5Wj836u

Special thanks to https://digitalcoinprice.com for the charts for all four of
these crypto-currencies for anyone to look at.