New Cryptocurrency Focuses on Price Stability
August 06, 2018
Cryptocurrency still has the reputation for significant price swings. In this episode of the TechTalk, we look at a new contender—with some big backers—that’s tied to the U.S. dollar to help temper that volatility.
DP: So what have we got for our listeners today?
DK: Sure. So Circle, a Boston based FinTech startup, now offers a cryptocurrency tied to the U.S. dollar called USD Coin.
DP:Yeah, cryptocurrency was, was really hot not long ago. It’s cooled down a little bit. Tell us about this one. Why is this one somewhat counterintuitive?
DK:Sure. So, cryptocurrencies were originally designed as an alternative to the federally regulated banking system. But when you tie it to the U.S. dollar you’re essentially joining the establishment.
DP: So it’s my understanding Circle has a couple of deep pocket supporters, correct?
DK: That’s right. So the industry leading crypto mining company Bitmain has invested $110 million. Their operating profit was a staggering three plus billion dollars last year and Goldman Sachs along with several VC based firms have brought Circle’s valuation to more than three billion dollars.
DP:So what may be different here?
DK: As you know with cryptocurrencies it starts and ends with volatility.
DP: Absolutely, I mean, as we all know, Bitcoin is down considerably from its $20,000 high.
DK:Yup. So Circle uses a peer-to-peer network that uses blockchain and Circle clients must have a dollar for every USD coin held in order to minimize that volatility.
DP: And Circle has another interesting wrinkle too, doesn’t it?
DK:Yeah, so its framework is open source so that many developers can both work and oversee the currency.
DP: Interesting. So what’s next for Circle?
DK:They’re looking at a similar system for the Pound and the Euro so we’ll see how it develops and what comes next.
DP: Ok. So they’re looking far and wide. Well Dave, thanks again for dropping some knowledge on us.
DK:Thanks for having me.
DP:And thank you for listening to TechTalk as part of the EisnerAmper podcast series. Visit EisnerAmper.com for more information on this and a host of other topics. And join us for our next EisnerAmper podcast when we get down to business.