Imagine a future where your refrigerator monitors its contents and automatically orders out-of-stock items from your preferred supplier, who will deliver it to your door, while your refrigerator automatically pays for purchases in digital currency . This is the third-generation online world depicted in the sci-fi series “Buck Rogers in the 25th Century”.
Cryptocurrency developers are currently thinking about building payment systems through smart contracts that convert everything into digital currency. The next generation of the Internet, known as the “third generation network,” will be able to automate transactions using these digital currencies.
So, will this digital currency be a stablecoin? Or is it similar to the digital fiat currencies that are currently being issued in various countries?
In an article published in the American newspaper “The Hill”, author Paul Kubic pointed out that the third-generation network will use a hybrid digital currency that, in addition to stablecoins, will include a new type of bank mortgage. Once you have this system, there is no need for digital fiat currency or dozens of new government regulations.
In March, U.S. President Biden issued an executive order to assess the risks associated with digital assets, including private stablecoins, and required federal agencies to design the necessary policies and regulations to mitigate those risks.
In addition, the Federal Reserve, the Treasury Department, and the U.S. Department of Justice are required to authorize reports on the legality of launching a Federal Reserve digital currency and its potential risks and benefits.
Private stablecoins are digital currencies that can be purchased and traded over the Internet. To date, private stablecoins have not gained widespread acceptance as a means of payment, and their growth has largely been reflected in being used to facilitate the transactions of other digital assets. Stablecoins are designed to maintain a stable value relative to a reference currency (such as the U.S. dollar) or a commodity (such as gold).
The authors explain that many stablecoins attempt to use the dollar proceeds of newly issued stablecoins to invest in high-quality, short-term, liquid equivalent dollar-denominated assets held by stablecoin originators as reserves to realize money market value. stability, thereby maintaining the value of the currency.
There are also other versions of private stablecoins that hold cryptoassets as reserves or use algorithmic arbitrage to maintain a stable value-to-dollar ratio.
So far, no insured institution has issued private stablecoins, instead, these private stablecoins are owned by some unauthorized entity, or an entity authorized to operate as a state-regulated remittance agent, also Or authorized to issue by a limited-use trust company.
The authors point out that the Fed’s digital currency has other serious drawbacks, one of which is that it puts the responsibility directly on the Fed, which means that a dollar in the Fed’s digital currency can always be exchanged for a dollar from the Federal Reserve . Therefore, for investors looking for a safe currency, the Fed digital currency will be the ultimate safe and attractive asset.