Cryptocurrencies have failed thus far. No one has actually adopted them as currencies, to buy and sell stuff with. This is because it’s a terrible experience to not know what you can buy tomorrow or sell for today with the same amount of money. This is the crucial problem with current crypto-’currencies’. They really aren’t currencies, they’re more like crypto-speculative-assets.
The ecosystem has caught up. Either you make currencies, and that means at the very least having stable value, or you won’t actually get adoption.
This is why stablecoins are now hot. We know of more than a 100 projects and a lot of money being raised.
This is excellent: Actual cryptocurrencies, stable cryptocurrencies (“stablecoins”) will be the first introduction to crypto for millions or billions of people.
This is also terrible: If the first experience is a massive violation of trust and the creation of unnecessary economic hardship, this could be a major setback instead of a leap forward. It could make it much harder for legitimate cryptocurrencies to take hold, and could give governments the political will to massively hamper innovation in the crypto space.
We are already stuck in a tragedy of the commons. Many investors and stablecoin issuers could personally gain from a
stablecoin project even if it breaks later. This misalignment of incentives means that stablecoin project founders will have to make choices that are not in their own economic interest in order to act responsibly.
Personal responsibility is necessary, but not sufficient. The industry needs to coordinate to further everyone’s best interests.
This is why [something about Open Currency Movement?
Today there is a severe lack of transparency and trust in many of the world’s monetary systems. Hundreds of millions of people live in countries without stable currencies, resulting in dramatic losses of wealth. This inability to effectively protect savings prevents people from planning for the future and bettering themselves. The world needs a stable, global, digital currency that gives people autonomy and control of their money.
The result: a massive opportunity for stablecoins to fundamentally transform the way the world transacts. But with this opportunity comes enormous responsibility.
On one hand, the potential for stablecoins to bring financial stability and prosperity to millions of people is extremely positive. On the other hand, if the stability of these digital currencies fails, millions could lose their savings.
Here at Reserve, this is not a responsibility we take lightly. In everything we do, we are committed to considering not only the profitability of different options for the Reserve network, but also the broader impact each option will have globally.
Some stablecoin projects pay investors large sums of money right from the beginning. But taking this capital out of the system results in a reduction in stability. We do not take this approach at Reserve.
Our Reserve Protocol strikes what we believe to be the optimal balance between stability, decentralization, and scalability while supporting arbitrary increases or decreases in demand. This conservative approach is designed to be better for investors in the long term, since only coins that maintain stability will be capable of addressing the entire market.
We grappled with whether to educate the cryptocurrency world about our insights into how to build a robust stablecoin, since we have the self-serving incentive to keep our technology private as long as possible to maintain a competitive advantage.
But we concluded that the stakes are too high to let this incentive determine our behavior. Replacing the numerous dying inflationary fiat currencies around the world is a critical step to exporting the economic stability of the developed world to the rest of the globe. Operating purely in self interest would be fatal to achieving this.
To fulfill our mission of scaling prosperity globally, it is better to enable others to build technology based on our insights if it reduces the odds of other stablecoins defaulting and causing economic disaster. And it just so happens that this also helps increase the value of our network, which rewards our investors. We still keep the details of our go-to-market strategy private to maintain an advantage, since other projects with less insight into how to serve the global market don’t have the same potential negative impact.
In many cases, the cryptocurrency market is an area where the laws haven’t caught up yet. It’s easy to take actions that, while legal, can still be destructive. So we have to think hard about the right way to operate, and act accordingly even in instances where there is no law preventing us from doing otherwise. At Reserve we are committed to self-governance guided by our vision of helping scale prosperity to as many people around the globe as possible.
Furthermore, the Reserve network is, in a sense, a new kind of government. We are supplementing - and in some cases wholly replacing - the government function of money, and the individuals who control the network won’t be government bodies. So like any responsible government, we are committed to constantly considering, monitoring, and optimizing the impacts of our actions in order to best serve our constituents.