Gemini Coin: Backed ERC20 stablecoin launches today
The new coin will be audited by BPM monthly, and the results will be publicly available.
The Gemini dollar is the new coin on the block, Cameron Winklevoss announced today, and as a collateralised ERC20 USD-pegged stablecoin, it's functionally is very much a chip off the old block.
How Gemini dollar works
Gemini dollar (GUSD) works exactly like Tether, TrueUSD, Cornerstone or several other cryptocurrencies in that it's a straightforward digital coin pegged to the US dollar and backed by real or ostensibly real US dollars in a bank account.
As an ERC20 token, it also runs on the Ethereum network, just like TrueUSD does, while Tether runs on the bitcoin-linked Omni network and Cornerstone is based on Stellar.
Technically, it's more or less exactly like all the other backed USD-pegged stablecoins, which mostly only differ in trustworthiness, reputation and the financial arrangements around holdings.
This might also be where Gemini dollar stands out, with the announcement saying the corresponding US dollar backing is held in a bank located in the United States. Tether claims the same but may have lost a lot of credibility lately after a staunch refusal to ever get audited, while TrueUSD uses third-party trusts which in turn hold the funds in their probably-variously-located banks.
The Gemini dollar backing, by contrast, will be held in a bank located in the United States, Cameron Winklevoss writes, and will be examined monthly to verify the backing.
"The U.S dollars that correspond to the Gemini dollars issued and in circulation will be held at a bank located in the United States and eligible for FDIC 'pass-through' deposit insurance, subject to applicable limitations. In addition, the U.S dollar deposit balance will be examined monthly by an independent registered public accounting firm to verify the 1:1 peg," he says.
The audits will be made publicly available here and the first one, dated to 9 September, shows 100,000 GUSD in circulation along with US$100,000 in the bank as verified by BPM accounting.
While from one angle it seems like the market may be getting a bit over-saturated with US-pegged collateralised stablecoins, from another angle it's clear that Tether's failures around transparency have left a wide opening for new competition. And that new competition has started driving truckloads of verifiable and accountable US dollars through that opening.
Disclosure: At the time of writing the author holds ETH, IOTA, ICX, VET, XLM, BTC and ADA.
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