Vitalik Buterin, Ethereum’s founder and leader, is not Justin Sun (Tron’s Founder and CEO for Tron and BitTorrent) biggest fan. In fact, the feud between them is well known for all those who follow either of them on Twitter, especially since Tron left Ethereum behind to launch it’s very own Main Net.
While this is all about personal opinion (for now), it would seem that Mr. Sun is getting the best of Mr. Buterin, at least going by appearances. One of Tron’s latest developments will be launching the USDT-Tron cryptocurrency, a stable coin that’s backed by a physical USD for every token issued. Could this new token be the thing that finally puts Tron ahead of everybody else?
Mr. Sun is quoted saying that Tron’s main objective was to leave Ethereum behind in terms of decentralized applications and smart contracts. That prompted a somewhat mocking answer from Mr. Buterin, but it seems that Tron is getting there.
Mr. Sun has lined up several ducks to achieve Tron’s goals. Among those is the BitTorrent acquisition. But also securing many strategic partnerships with many of the industry’s most prominent players. In a recent Tweet, Mr. Sun announced that Tron boasts 267.000 dApp users.
That makes Tron the network with the most dApp users in the world (and wait until BitTorrent merges into Tron’s network and that figure goes to hundreds of millions). EOS is next with 197.000 and Ethereum lags behind with 151.000 within the same period.
The numbers do not come from Tron’s own surveys but from a reliable third party, DappReview, so even Mr. Buterin can’t complain about bias or about Mr. Sun ringing his own bells. As thing stand, Tron is the world’s foremost decentralized app platform in the world.
What’s a stablecoin, anyway?
Tron partnered up with Tether. Together they will take Tether’s token (USDT) and relaunch it as a Tron-based token called USDT-Tron. This is a different kind of cryptocurrency called stablecoin. It’s called that because its value is pegged to the USD.
That’s what a stablecoin is, a cryptocurrency that’s backed by some kind of physical asset (USD, Euros, gold, etc.). This kind of token is not as volatile as purely virtual cryptocurrencies, and they aim to imitate the behavior found in fiat currencies, especially the most liquid and stable ones. That should make for better token scalability and safer transactions.
Because the usual pegging is of 1:1 to a particular fiat currency, stable coins are not as volatile as other digital assets, but you can still trade them in trade and exchange platforms.
The new USDT will be issued using Tron’s TRC-20 token technology, and it will become supported by the whole Tron network to the same extent to which it supports the native token, Tronix (TRX).
The vision for these new kinds of cryptocurrencies pegged to some asset or commodity is to become the foundation for a new worldwide system of payment that would be an improvement over current methods. It would be secure, transparent, decentralized, fast, reliable and cheap. It would use digital cash (cryptocurrencies) as means for value transfer. That could help the Tron network to reach peak efficiency.
Stablecoins and Volatility
It’s no secret that the price of every cryptocurrency fluctuates daily, even hourly. And sometimes it’s just wild. Stablecoins provide an option to hedging your bets and protect yourself from extreme fluctuations in price. According to some analysts, it’s not just an option but the only one.
The original Tether token (USDT) is based on Bitcoin, and it runs on a blockchain called Omni. According to Mr. Sun, the point in the Tron/Tether partnership is to move the token into Tron’s network which is much faster. Mr. Sun thinks that the move will benefit not only Tron but also other blockchains as Bitcoin and Ethereum so efficiency will improve in many networks other than Tron’s.
In his own words,
“The stablecoin is the most important thing when we come to the infrastructure and the whole industry. I think it will benefit the whole industry. Most of the congestion and the bad experience of the stablecoin comes from the Omni blockchain because this is an obsolete solution with costly, slow and also unreliable infrastructure for the stablecoin.”
The new version of the USDT stablecoin is barely a week old so it’s still too young and it’s premature to imagine too much about its current and future use cases, but some options seem very clear, let’s explore them a little.
Tronix as a currency
As its adoption widens, Tronix or TRX could be used as any other currency (virtual or fiat) to pay for goods and services of all kinds. It will have the extra advantage of being a digital currency. Stablecoins are particularly useful to settle international payments as they obviate the cumbersome exchange of fiat currencies. Transactions are carried out almost in real time, and fees are much lower than the standard services.
So why will the USDT help TRX? Because it’s going to be a TRC20 token, which means it will be based on TRX as a base currency and that will enhance demand and usage for Tron’s native token. Anything you can do with USDT-Tron, you can do using TRX as well, it’s as simple as that.
Peer to Peer payments. Recurring payments
Stablecoins can also be used to satisfy the terms of smart financial contracts, which are electronic contracts issued on a blockchain whose terms are enforced automatically by a software system. No third party or central authority has any hand in managing the contract.
Smart contracts are autonomous, the transactions they prompt are automatic and traceable, they’re transparent and irreversible. That makes them perfect as a tool for paying wages, loans, rent, and subscriptions.
Cryptocurrencies can be a driving force in helping equality in the world by facilitating value transfer between countries. Ripple, Cardano, and Stellar Lumens are already working hard on that and Tron could join that enterprise helped by the new USDT-Tron currency.
Migrant workers all over the planet need to send money back home to their families. The primary way to do that has been through the services of remittance services such as Moneygram or Western Union. These services are faster and cheaper than international bank transfers (which are prohibitive for gig workers because of costs and the need to have a local bank account).
But they’re still slow and expensive for people that do not earn that much money because the fee they must pay is not negligible compared to the amount of money they’re moving.
Value crash protection
Fiat currencies crash in value every now and then. The Venezuelan Bolivar is a case in point currently. TRX could allow people who find themselves watching how their local currency goes down like a led balloon could use any cryptocurrency backed by USD or Euro to make sure their hard-earned savings do not lose all its value overnight, or that hyper-inflation renders their previously valuable salary worthless. This would be a great use case for both USDT-Tron or TRX alike.
Also, the stability of USDT could facilitate the pairing of TRX with many of the world’s fiat currencies thus facilitating the process of protecting value.
Launching a crowdfunding campaign based on digital assets could be a terrible idea as market fluctuations could make the whole thing an exercise in futility (or make you rich in a heartbeat… which is possible but highly unlikely).
With USDT as a stabilizing and hedging resource, Tron could deploy decentralized crowdfunding apps that could collect funds in a crowdfunding campaign while making sure that the donations keep their value even if the market behaves in its usual roller-coaster fashion.
Microfinancing and Lending
Peer to peer lending could be an option too. A dApp could asses a borrower’s risk profile and reputation, negotiate a return rate on borrowed funds and manage a microloan from beginning to end including interest payments, dates of payment, penalty systems, etc.
The technology already exists for Bitcoin, but the volatility factor was bad enough to prevent a successful implementation because lenders risk losing more value than what they earn in interest because of fluctuations.
Justin Sun on what’s next for the project and the new currency
A digital asset as stable as USDT-Tron is expected to be, running on a much better network than Orion could change the game in payments and trades by bringing stability and seamlessness to the table. Because it’s based on Tron’s TRC20 token technology, it’s fully compatible with the Tron network which means that it can be used in smart contracts.
And soon, Tron-based tokens will offer enhanced privacy options for TRX holders (but also to any Tron-based coin). If you put all of those things together, you could have institutional investors into the picture.
“We’re getting lots of interest from these institutional investors. I think we’ll do everything to fulfill their requests because when the institutional investor gets into this industry, they have lots of requests. Lots of institutions don’t want people to know they’re buying cryptocurrencies. They don’t want people to know their accounts or how much money is in their accounts.”
The project consists of a second stage too. It involves cross-border payments settlement for consumers. Mr. Sun sees use cases there that will put Tron in the same league as Stripe and Square whose market is in mobile users and e-commerce for merchants and shoppers.
There’s even a possible collaboration with arch-rival Ethereum in the works. “I think even within this year, we will see Tron even collaborate — officially collaborate — with Ethereum doing something good for the industry.”
Last but not least, Tron will update the main net to enhance scalability at some point during this year’s Q2. Mr. Sun says that the upgrade will reduce fees while improving performance by a hundred times in TRX transactions. That sounds too good to be true.
But Mr. Vitalik Buterin is quoted criticizing the promised features that the new Tron network would have as too good to be true as wells. That was about a year ago, and Mr. Buterin had to eat his words when the Main Net was finally launched because it delivered on every promise. That’s what we’ve come to expect from Tron so, if Mr. Sun is talking about a 100x increase in performance, we think his word is just as good as a USDT-Tron in the bank.
What’s in it for Tether?
We’ve talked a lot about the benefits Tron and Tron users will enjoy because of the new token, but this is not a unilateral thing but a partnership that includes Tether. So how will it benefit? In several ways.
First of all, the Tether token will enjoy the use of a good network. That will enhance the coin’s use because transfer fees will go down and transfer speeds will go up. You see, until now there’s been little controversy about Tether’s coin’s value. But because the network was slow and the fees were relatively high, there was a lot of doubt about its viability as a real-world payments system. Re-deployment over the Tron network will change that for good.
Also, the partnership will create use cases that USDT can’t reach on its own because it’s been existing in almost complete isolation. The new use cases will increase demand for the token. And that will enhance the project’s reputation in the crypto verse and among institutional investors, as well as Tron’s.
So keep a vigilant eye about the Tron/Tether partnership. It seems to be one of those rare partnerships in which everybody wins. And so could you.
Image courtesy of Pixabay.
Disclaimer: The presented information is subjected to market condition and may include the very own opinion of the author. Please do your ‘very own’ market research before making any investment in cryptocurrencies. Neither the writer nor the publication (TronWeekly.com) holds any responsibility for your financial loss.