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Minting a Stable “Anchor” for the Crypto World

Opinion

Minting a Stable “Anchor” for the Crypto World

Massive price swings. Market instability. These are among the many realities facing today’s world of cryptocurrency.

Today a new class of crypto assets has emerged, offering promise in terms of providing a measure of price stability and reserve asset backing. Known as stablecoins, these digital assets seek to address common issues around instant processing, payment security, privacy, and asset volatility.

Despite promising gains in this space, market uncertainty around crypto-assets continues to exist. This scenario of high volatility is largely seen as a barrier to widespread crypto adoption and practical use.

It’s here where stablecoins have the potential to drive widespread digital currency adoption, serving as a new and innovative medium of exchange. Currently, two highly recognized stablecoins, Tether and Gemini, serve as fiat-backed, digital versions of real-world assets. And there are scores of other stablecoin projects launching by the day.

Despite growing recognition of their benefits, these assets remain highly susceptible to market swings, inflation, value depreciation, and other vulnerabilities. This has opened the door for an alternative to fiat-pegged stablecoins.

One stablecoin seeking to deliver an alternative solution in this space is Anchor. The vision of this algorithmic stablecoin pegged to global economic growth is to create a platform that any crypto or traditional currency can peg to their market value. The broader goal of Anchor is to ensure stability regardless of factors like fiat currency, market fluctuations, or economic recession.

Through the development of an algorithmically calculated financial index based on global GDP, Anchor hopes to emerge as the first reliable financial standard and measure of value since the International Monetary Fund’s (IMF) Special Drawing Rights (SDR). This financial solution undergirded by a security-centric model will continue to draw interest from individuals, businesses, organizations, and governments worldwide.

According to Anchor Founder and CEO Daniel Popa in an August 26, 2019 press release:
Given the uncertainty plaguing the world’s fiat-driven economies, Anchor is providing an alternative to fiat-pegged stablecoins and offering crypto traders, businesses, organizations, and individuals long-term price stability, preservation of purchasing power, and protection against inflation while hedging against market volatility.”

Anchor Chief Communications Officer Olya Moskalenko had this to add: “The US dollar alone has depreciated by 2.5% per year over the last 25 years, which translates to a loss of over 55% of its purchasing power. That’s a significant loss when one is saving for college or for a pension.”

Anchor is an alternative as a two-token algorithmic stable coin is pegged to global economic growth. Moreover, it’s designed to outpace overall inflation, which has been calculated for more than 190 countries. This will allow it to serve as a hedge against daily market fluctuations and volatility, providing verse long-term and short-term benefits.

Continues Moskalenko: “We believe that fiat-pegged stable coins which are dominating the market are essentially just a digitized version of our currently flawed system. In our view, a more technology-centric currency or monetary system which prevents external biases, manipulations or fluctuations impacting stability is sorely needed. This is where Anchor holds such great promise.

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Michael Scott is a contributor to Blockchain Beach, specializing in the areas of blockchain technology, cryptocurrency and digital cities.

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