Gemini Trust Company, founded by Winklevoss twins, received New York Department of Financial Services (NYDFS) approval to launch its first cryptocurrency on the Ethereum blockchain called the Gemini Dollar. The Gemini Dollar will be backed by USD in the hopes of becomes a stablecoin that can help facilitate investor onboarding and trading with cryptocurrency assets.
The Stability factor behind Gemini Dollars
The Winklevoss established the Gemini cryptocurrency exchange which ranks at 54th position globally by size. Currently it supports Bitcoin, Zcash and Ethereum. The Gemini Dollar would be different as it has been designed to be a medium of exchange with the value pegged to the US dollar. Tyler Winklevoss explained, “One doesn’t always spend gold to buy an item. You normally don’t buy something with a share of an Apple. Generally, you first convert them into fiat currency. 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.”
What are StableCoins?
Stablecoins are cryptocurrencies that are backed with a 1 to 1 ratio of fiat currencies. The underlying concept behind a stablecoin is to offset the drastic price fluctuations often seen by other cryptocurrencies in the hopes of having a USD equivalent asset trading on crypto exchanges. In the case of Gemini Dollar, BPM will conduct the third-party financial audits to check that there is a 1:1 parity between U.S Dollar and Gemini Dollar accounts. Tether (USDT) was the first stablecoin to enter the market. The company partnered with large exchanges like Bitfinex and Bittrex to help the onboard USD onto exchanges that had a difficult time maintaining bank accounts with traditional banking institutions. Investors would purchase USDT tokens from the Tether company directly, then transfer the tokens onto exchanges to trade for other cryptocurrencies and in the process circumvent the obstacles that the government and banking institutions place on cryptocurrency companies. Hopefully Gemini operates with a little less controversy than Tether.
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