Digibyte cryptocurrency founder and CTO Jared Tate has tweeted that a new stablecoin, DigiDollar, will be launched on the Digibyte network. The DigiDollar will be pegged to the US dollar.
Stablecoins like Tether and USD Coin are backed by the US dollar. Users have to trust that the stablecoin promoters are backing up each stablecoin with a US dollar but do not have any way of verifying it in real-time. The audits of stablecoins are carried from time to time. However, the time between the two audits is also decided by the promoters. Apart from fraudsters, a company may fall on hard times and the promoters may decide to not back-up their stablecoin for some time. What if the company does not recover? It will be caught in the audit but till then, it can merrily distribute stablecoins.
To resolve this issue, the DigiDollar will be pegged to a user’s digital wallet or his bank account using smart contracts and API would confirm the account balances. Thus, users would back-up DigiDollar in real-time with their fiat or cryptocurrency holdings. This will be a truly decentralized system as each user will have to back-up his DigiDollar holdings and will be free to choose in which to do it.
Banks have been lukewarm to cryptocurrencies and may refuse API access for linking DigiDollar to user’s bank accounts. Also, a set of Anti Money Laundering (AML) and Know Your Customer (KYC) protocols will be needed for the DigiDollar.