US startup TrustToken announced last Wednesday that it is releasing a new stablecoin dubbed TrueUSD. The token has been in development for just over a year and will be pegged to the US dollar. TrueUSD will be competing with other similar tokens, such as DAI and tether.
TrustToken is the brainchild of former Palantir and Google Brain engineer, Rafael Cosman, as well as co-founders, Stephen Kade and Danny An. The trio founded TrustToken in 2016.
"I grew up with an engineering background and started with programming when I was very young. When I was at Stanford, I was focused on AI," Cosman tells Cointelligence. Hardly the first of its kind, TrustToken's rollout follows the inception of DAI this past December. Increased demand for bitcoin and altcoins is raising the need for a solution for using USD on crypto exchanges.
TrustToken's first major product is dubbed TrueCoin, or more specifically, TrueUSD. The token will be backed, dollar-for-dollar, with reserves held by FDIC-insured banks. There will be no doubt as to the value of the tokens minted, as every transaction will be available in the blockchain history of the token. Tokens will only be minted upon order from traders, and no advanced minting will take place. For now, token orders will only be filled for major transfers with a minimum of $10,000.
"We have a network of compliant banks. We are a tech company sitting on the blockchain side with the tokens, but it's our fiduciary partners who handle the dollars. If you send $10,000 to them, they will let us know that the money has been cleared," Cosman explains.
Eventually, the minimum transaction requirement will be lowered. The company plans to release tokens pegged to other currencies, bonds, and eventually real estate properties in the future.
TrustToken's closest competitor is tether (USDT), and this competition has been the subject of much debate over the past months. Tether has created over 2 billion tokens, according to recent reports.
Cosman argues that the approach taken by his asset-backed token is superior to the so-called "algorithmic stablecoins". In order to stay pegged to a respective fiat currency, algorithms work to adjust token supply automatically. Minting new coins, when price is too high, and theoretically buying tokens back when it is too low. As such, TrueCoin has a built-in fail-safe.
"Our perspective is that it would be cool if that worked," Cosman states, citing examples like BitUSD and Basecoin. "None of them have worked yet. The only one moving right now is tether."
Yet tether's supply is suspect. Tether claims to have minted $850 million worth of USDT since January 1st alone, nearly doubling its total supply. Despite claiming transparency and regular audits, there has been no independent confirmation of their claimed reserves. TrustToken believes that, as the folly has yet to be corrected, exchanges' demands are still unmet.
Cosman stated that TrustToken and TrueUSD will have a major advantage, as tether's banking partners severed relationships with the company in March 2017. "There is a legal connection between the tokens and the underlying dollar," Cosman says of TrueUSD. "Tether's terms of service do not promise that. Tether is a startup tech company. You're trusting them with your money."
For Cosman and others, getting stablecoin right can break the trust barrier the general public (and regulators) have with crypto. "We think that a trustworthy 'truecoin' can help spread adoption of cryptocurrencies," says Cosman.
Those interested can order tokens on the company's website. TrueUSD should be available on different exchanges in the months to come.
TrustToken is the brainchild of former Palantir and Google Brain engineer, Rafael Cosman, as well as co-founders, Stephen Kade and Danny An. The trio founded TrustToken in 2016.
"I grew up with an engineering background and started with programming when I was very young. When I was at Stanford, I was focused on AI," Cosman tells Cointelligence. Hardly the first of its kind, TrustToken's rollout follows the inception of DAI this past December. Increased demand for bitcoin and altcoins is raising the need for a solution for using USD on crypto exchanges.
TrustToken's first major product is dubbed TrueCoin, or more specifically, TrueUSD. The token will be backed, dollar-for-dollar, with reserves held by FDIC-insured banks. There will be no doubt as to the value of the tokens minted, as every transaction will be available in the blockchain history of the token. Tokens will only be minted upon order from traders, and no advanced minting will take place. For now, token orders will only be filled for major transfers with a minimum of $10,000.
"We have a network of compliant banks. We are a tech company sitting on the blockchain side with the tokens, but it's our fiduciary partners who handle the dollars. If you send $10,000 to them, they will let us know that the money has been cleared," Cosman explains.
Eventually, the minimum transaction requirement will be lowered. The company plans to release tokens pegged to other currencies, bonds, and eventually real estate properties in the future.
TrustToken's closest competitor is tether (USDT), and this competition has been the subject of much debate over the past months. Tether has created over 2 billion tokens, according to recent reports.
Cosman argues that the approach taken by his asset-backed token is superior to the so-called "algorithmic stablecoins". In order to stay pegged to a respective fiat currency, algorithms work to adjust token supply automatically. Minting new coins, when price is too high, and theoretically buying tokens back when it is too low. As such, TrueCoin has a built-in fail-safe.
"Our perspective is that it would be cool if that worked," Cosman states, citing examples like BitUSD and Basecoin. "None of them have worked yet. The only one moving right now is tether."
Yet tether's supply is suspect. Tether claims to have minted $850 million worth of USDT since January 1st alone, nearly doubling its total supply. Despite claiming transparency and regular audits, there has been no independent confirmation of their claimed reserves. TrustToken believes that, as the folly has yet to be corrected, exchanges' demands are still unmet.
Cosman stated that TrustToken and TrueUSD will have a major advantage, as tether's banking partners severed relationships with the company in March 2017. "There is a legal connection between the tokens and the underlying dollar," Cosman says of TrueUSD. "Tether's terms of service do not promise that. Tether is a startup tech company. You're trusting them with your money."
For Cosman and others, getting stablecoin right can break the trust barrier the general public (and regulators) have with crypto. "We think that a trustworthy 'truecoin' can help spread adoption of cryptocurrencies," says Cosman.
Those interested can order tokens on the company's website. TrueUSD should be available on different exchanges in the months to come.