The bearish market of the cryptocurrencies can hardly stop the Winklevoss brothers who had received permission from New York regulators on 10th September 2018 to launch their own stablecoin. The creators of the cryptocurrency trading platform, Gemini were present from almost the initial discussions about stablecoins as a step towards liquidity and risk protection in the cryptocurrency world. Gemini Dollar is their first cryptocurrency, a regulated stablecoin that is hosted on the Ethereum network. The Gemini Dollar will allow the users to transfer and receive U.S. dollars on the Ethereum blockchain.
How Stable is Gemini Dollar?
The Gemini trading platform founded by Tyler and Cameron Winklevoss till now supports Bitcoin, Ethereum and Zcash. The Gemini Dollar is slightly different from these cryptocurrencies as it has been designed to act as a medium of exchange and its value is secured to USD. According to Tyler Winklevoss, one does not usually use gold to buy something; rather converts it into fiat currency first. He stated this reason for developing Gemini Dollar, “That’s why we are striving to bring a fiat currency onto the blockchain which can be utilized as an effective exchange medium for payments. Moreover, there is a network of trust which surrounds this coin.”
The cryptocurrencies that are pegged to the fiat currencies in a 1:1 ratio are known as stablecoins. The objective behind developing stablecoins is to curb the volatility or drastic price fluctuations usually experienced by the cryptocurrencies. Talks are that BPM will perform the financial audits to ensure that the 1:1 proportion is maintained between the U.S. dollar and Gemini Dollar accounts.
Gemini Dollar is a Step Ahead
Gemini Dollar can be said to be a step ahead of the previously launched stablecoins as it is regulated by NYDFS (New York Department of Financial Services). Gemini takes the help of State Street bank to secure the fiat assets and an insurance program that is designed by the Federal Deposit Insurance Corporation or FDIC. BPM Accounting and Consulting, an independent auditor is concerned with carrying out audits of Gemini’s bank holdings and issue public reports regarding it.
The whitepaper of Gemini Dollar states its objective is to deliver a “solution that provides the security of an offline approval mechanism yet the flexibility of an online approval mechanism.”
The features of Gemini Dollar as stated in the whitepaper includes, “an offline approval mechanism for high-risk actions, and a hybrid online-offline approval mechanism for token issuance that provides the desired level of security and flexibility.” The trust mechanism is designed to link the examiners and licensed financial institutions.
All in all, the Gemini Dollar was developed by the Winklevoss brothers to offer a viable medium of exchange and unit of account for various decentralized as well as centralized applications. This is also expected to bridge the gap between the cryptocurrency market and traditional banking system. People will now be able to easily convert U.S. dollars into Gemini Dollars and vice-versa without worrying much about the volatility of market.