New Cryptocurrency Focuses on Price Stability
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.
Dave Plaskow: Hello and welcome to EisnerAmper’s technology podcast series. With more than 500 technology clients, we’re always interested in the latest industry trends and developments as well as any related business and accounting opportunities and challenges.
I’m your host Dave Plaskow, and with us today is Dave Katz, Senior Manager in EisnerAmper’s Technology and Life Sciences practice. Yes, it’s another episode of TechTalk. Today’s episode is on a new type of cryptocurrency – somewhat of a hybrid as you’ll hear. Dave, welcome.
Dave Katz: Thanks Dave. Good to be here as always.
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.
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