In the digital currency trading market, Bitcoin (BTC) and other major currencies (ETH, EOS) because it is more dramatic fluctuations, can bring a greater return on investment to investors is widespread concern. Meanwhile, USDT, stable currency has led USDK currency price guarantee stable prices in the long term. So today, we have to talk about the issue of a stable currency.
Why do we need a stable currency
Currency stability is necessary to protect our actual landing of the block chain technology applications in real life. Any application requirements with lower volatility (eg consumer loans) in the block chain, there can be 10-20% of currency fluctuations every day. For example, if you want to use technology to complete the block chain of international trade settlement, if selected digital currency price fluctuations, it is likely you are trading ten million yuan of goods, get digital currency devaluation occurs, make yourself only harvested eight million yuan worth of digital currency.
How stable currency operations (for example with USDT)
USDT currency speculation you must be very familiar with the players, USDT also known as Tether, providing 1 through Tether: US $ 1 exchange for legal tender offer currency exchange services and digital. Often exist as legal tender and bridge the digital currency in the digital currency investments.
And Bitcoin and other major currencies different, USDT itself does not own a chain, but is dependent in Bitcoin system. To understand his principle of operation, we must first know the OP RETURN. OP RETURN Bitcoin is an increase of 0.9 new exciting features, it allows developers to add up to 40 bytes of non-transaction information in a transaction, which in addition to the Bitcoin currency other than the functional development has left a huge imagination.
How stable currency operations (for example with USDT)
USDT currency speculation you must be very familiar with the players, USDT also known as Tether, providing 1 through Tether: US $ 1 exchange for legal tender offer currency exchange services and digital. Often exist as legal tender and bridge the digital currency in the digital currency investments.
And Bitcoin and other major currencies different, USDT itself does not own a chain, but is dependent in Bitcoin system. To understand his principle of operation, we must first know the OP RETURN. OP RETURN Bitcoin is an increase of 0.9 new exciting features, it allows developers to add up to 40 bytes of non-transaction information in a transaction, which in addition to the Bitcoin currency other than the functional development has left a huge imagination.
USDT architecture is divided into three layers:
Bitcoin layer: the use of OP RETURN function Bitcoin, the use of distributed books Bitcoin transaction information USDT is reserved.
Omini protocol layers: Release USDT and destruction of function, OminiApi, tracking Tether circulation, provided the block chains browser functionality and allows users to perform transactions through http://Omnichest.info USDT
Tether Application Layer: USDT flow of regulation, allows the user to 1: 1 ratio with USDT currency exchange method.
Package OP_RETURN omni information code is as follows:
UniValue omni_createpayload_simplesend(const UniValue& params, bool fHelp)
{
if (fHelp || params.size() != 2)
throw runtime_error(
"omni_createpayload_simplesend propertyid \"amount\"\n"
"\nCreate the payload for a simple send transaction.\n"
"\nArguments:\n"
"1. propertyid (number, required) the identifier of the tokens to send\n"
"2. amount (string, required) the amount to send\n"
"\nResult:\n"
"\"payload\" (string) the hex-encoded payload\n"
"\nExamples:\n"
+ HelpExampleCli("omni_createpayload_simplesend", "1 \"100.0\"")
+ HelpExampleRpc("omni_createpayload_simplesend", "1, \"100.0\"")
);
uint32_t propertyId = ParsePropertyId(params[0]);
RequireExistingProperty(propertyId);
int64_t amount = ParseAmount(params[1], isPropertyDivisible(propertyId));
std::vector<unsigned char> payload = CreatePayload_SimpleSend(propertyId, amount);
return HexStr(payload.begin(), payload.end());
}
std::vector<unsigned char> CreatePayload_SimpleSend(uint32_t propertyId, uint64_t amount)
{
std::vector<unsigned char> payload;
uint16_t messageType = 0;
uint16_t messageVer = 0;
mastercore::swapByteOrder16(messageType);
mastercore::swapByteOrder16(messageVer);
mastercore::swapByteOrder32(propertyId);
mastercore::swapByteOrder64(amount);
PUSH_BACK_BYTES(payload, messageVer);
PUSH_BACK_BYTES(payload, messageType);
PUSH_BACK_BYTES(payload, propertyId);
PUSH_BACK_BYTES(payload, amount);
return payload;
}
Therefore, we can be simply understood:
- And the two strands are USDT credits logic bit, the bit actually use credits
- USDT transfer bits actually transfer credits
How stable currency success in economics
We can see that Bitcoin or any other major currency and stabilize the currency market can be compared to the stock market and money market.
| Mainstream currency (stock market) | Stable currency (money market) | |
|---|---|---|
| The main function | Capital gains, risk sharing | Provide liquidity |
| Price Discovery | Continue to price discovery | Avoid price discovery |
| Transparency | Transparent | opaque |
| Price sensitivity | Price sensitive | Price insensitive |
The stock market is to provide risk-sharing, and the money market in order to provide liquidity. The important point, money markets are inherently opaque, opacity in many cases but can provide better liquidity. For example, the Federal Reserve Bank does not disclose the specific information to its discount window loans, or due to a run equal to the causes of the liquidity premium.
The lack of transparent information, while preventing the liquidity premium, but also shaken people's confidence in the currency itself - we do not know what happened to this money. But why do we remain confident on the dollar? Because the United States with its strong financial strength and reserves to provide protection for the dollar. So, USDT is how to maintain the confidence of the holder?
Opacity may increase liquidity, but that does not mean we do not need transparency. Provide effective, aggregated information more useful than the original information provided liquidity . This point is vividly embodied USDT, Ted's official website has a special "transparency" page, above the record of the number of issued and USDT of information assets balances.
Tether full transparency of company information and the sum of $ 100% Reserve for a stable currency: 1 guarantee full dollar reserves, provide regular audits. 2. strict standards of KYC / AML verification. 3. The independent hosting does not require handling TrueUSD project team. Thus, Tether has been successful in stabilizing currency markets, it has become one of the most popular digital currency stable currency on the market (perhaps even NO.1).
Challenges faced by stable currency
Although stable currency can remain stable in the long term, but it is not as stable as its name, and smooth sailing.
With USDT example, since the audit firm to cooperate with the termination of cooperation, Ted did not provide a detailed audit report and did not prove whether all the assets in US dollars. So 2018 occurred an unprecedented mistrust of digital currency investors USDT, USDT also occurred around $ 1 discount.
On the other hand, the problem is not that the company itself aside, stable currency prices fluctuate due to market risk exists. When money placement line TrueUSD, TrueUSD prices have soared on its online exchange, up to 1.3 TUSD = 1 USD. Many investors will TUSD as a general token, other exchanges to try to "buy the dips" immediately after the discovery of coins will be safe on-line TUSD news, which led to TrueUSD price spikes.
Market participants will TrueUSD this should belong to the money market (information is not sensitive) as the stock market (sensitive information). In fact in the case of serious information asymmetry, temporary premium is also normal, as long as there is sufficient liquidity premium can be eliminated quickly. But TrueUSD mechanism laid its fatal flaw, which also led to its dollar peg for nearly half years.
postscript
These are some of understanding on currency stabilization technology and economics for some personal information you watched comprehensive summary of knowledge as well as their own money invested in the digital market. Stable currency understanding of project development block chain and landing, as well as digital currency investment is of great significance. In this done and to share personal humble opinion, I hope you comments or suggestions!
