Bitcoin Might Be Being Purchased To Act As A Reserve Currency• March 27, 2022 5:41 pm • Comments
Hal Finney was the first Bitcoin recipient back in 2009 that made a few predictions that are coming true just as he had predicted.
In 2010, the prediction was that Bitcoin would ultimately become a reserve currency that for banks and institutions that issue capital for its clients.
It seems that the prediction is starting to become true on a global scale now, especially after the recent announcement that Russia would be open to accepting Bitcoin for international trade exports like oil due to the confidence that it would have its value preserved unlike fiat.
Terraform Labs also just announced that their UST stable coin would be backed by a $10 billion reserve of Bitcoin as a way to ensure that the UST will have value.
— The Crypto Job Guy (@cryptojobguy) March 27, 2022
On March 14, Do Kwon, the founder of Terraform Labs, announced UST was going to be backed by a $10 billion reserve of bitcoin (BTC).
Terraform Labs created the Terra protocol that issues the stablecoin terraUSD (UST) and luna (LUNA), the latter of which algorithmically backs the former.
While Terraform Labs is not exactly a bank, it is issuing its own digital cash to make paying for things easier – and it’s about to be backed by bitcoin.
This is a big deal for anyone with a vested interest in the Bitcoin system, even if you vehemently reject altcoins (non-bitcoin cryptos; there is another, less flattering term for these).
Stable coins, by definition, are assets that are pegged to another asset that is typically a real-world asset where value is guaranteed.
Terraform Lab’s recent move to use Bitcoin as a reserve currency could potentially mark a new milestone for how the digital asset will be treated as going forward.
If this actually becomes successful, there will now be a way to have stable coins or other assets that are backed by an auditable decentralized asset which means that manipulation of the value is impossible.
The trend of utilizing Bitcoin as a reserve currency would be magnified many times over if entire countries also jumped onboard and not just institutions and firms.
The Terra/Luna purchase of #Bitcoin is what "reserve currency" means.
Bitcoin will be used by everyone in this way. We won't like some of the people using it.
That's more than ok. That's #Bitcoin being credibly neutral.
— Yago (@EdanYago) March 22, 2022
This should appeal to anyone who pays attention to crypto. The main criticism of collateralized stablecoins is that their need for “attestations” (not quite the same thing as audits) by accountants cut against the ethos of crypto.
“Don’t trust, verify” pulses through the veins of lovers of decentralization, and just taking what Circle or Tether tells us about their backing at face value seems wrong.
If successful, UST could become a dollar stablecoin backed by a completely auditable, transparent and decentralized digital asset. That’s a big deal.
You won’t need to trust Do Kwon that the collateral is there, nor an accounting firm that will qualify its assurances with weasel words. You’ll be able to see for yourself on the blockchain.
A digital asset that gains worldwide acceptance as a reserve currency that is publicly auditable and unable to be manipulated by any government or institution would hold significant impacts for the rest of crypto if it becomes true.
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— Terra (UST) 🌍 Powered by LUNA 🌕 (@terra_money) March 25, 2022
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