What is TrueUSD (TUSD)
One of the most sought-after outcomes for Bitcoin and other cryptocurrencies is the possibility of replacing fiat currencies and being used globally for day-to-day transactions and international transfers. While some say this will never happen, others believe it to be inevitable. While we don’t yet know which is true, one thing is certain: If a shift from fiat to crypto does happen, it will likely take years, if not decades, for it to happen.
Although cryptocurrency users can easily transfer funds to each other, they are still dependant on fiat currencies when purchasing day-to-day items given that very few places accept cryptocurrencies. So, in the short term, if fiat is hard to replace, why not try to improve it rather than outright replace it?
Part of the crypto world has become accustomed to the idea of growing alongside the legacy financial system, a strategy that may see blockchain technology integrated with the current financial paradigm in a cooperative manner, rather than overthrowing it. With this in mind, many projects in crypto have set out to create products designed with the existence of fiat currencies in mind. This is the case with stablecoins.
What is a Stable Coin?
Roughly speaking, a stablecoin is a blockchain-based cryptocurrency whose value is pegged to that of a more stable asset such as gold, oil, or fiat currencies. As such, stablecoins retain the same value as their underlying asset, mitigating the high volatilitycurrently present in the cryptocurrency market.
Tether or USDT is a popular example of a stablecoin in which a reserve of USD equal to the sum of issued tokens gets deposited into an audited bank account — Read our guide about Tether/USDT. On the Tether platform, users were allowed to deposit and withdraw real USD and, consequently, the number of tokens grew and shrunk according to the number of USD present in the bank account.
While USDT was used as a trusted stablecoin for a long time, recent rumours surrounding the legitimacy of the project and allegations of “fractional reserve banking” has led a large number of users to distrust the project. Moreover, lack of liquidity(ability to deposit or withdraw real USD) has led to multiple discrepancies in the USDT/USD markets provided by exchanges like Kraken and others.
Both the lack of trust and lack of liquidity have proven obstacles when trying to achieve the ideal model for a stablecoin.
TrueUSD, a new project that has built and launched a stablecoin, proposes a different strategy to deal with both of these issues and, while the project is young, TrueUSD appears to strive towards a higher standard as its name alludes to.
How Does TrueUSD Work?
There are mainly two processes involved while using TrueUSD, one is the purchase of TUSD, and the other is redeeming of TUSD.
- For Purchase of TUSD
For this, TrustToken works with multiple trust companies that already manage billions of dollars. And here the user is required to mandatorily pass a KYC/AML check after which one can send USD to a trust company to enter an escrow agreement. After the verification of the funds, their API instructs TrueUSD’s smart contract to issue the equivalent TrueUSD to the user’s public Ethereum address.
- For Redeeming TUSD
To redeem USD, one needs to pass a KYC/AML check and then send the smart contract, your TrueUSD tokens, from a registered Ethereum address after which the escrow bank will send you funds in USD. This way, the TrueUSD system does not touch the funds, and the trust companies do all purchase and receipt of user’s money through escrow accounts.
TrueUSD Team
The founding team comprises of real people who have worked previously with Google, PwC, and UC Berkeley. Plus, they are getting the required traction by doing the right legal framework that they have made.
Why Use TrueUSD?
TrueUSD is the true crypto backed by real USD fiat reserves that are audited independently and regularly. That’s why some of the benefits that it brings with itself are too good to ignore:
#1. TrueUSD is backed by the US dollar, acting as a stable currency for digital exchange.
#2. Anyone who passes a standard KYC/AML check can redeem TrueUSD for USD.
#3. Every TrueUSD is always 100% collateralized by USD, held in professional trust firms’ banks.
#4. The bank account holdings are published regularly and subject to monthly attestations.
#5. Regular independent third-party evaluations by leading auditing firms for best security practices.
#6. Transact directly with the trust firm’s bank. The TrueUSD system never touches the funds.
TrueUSD Fees
The current fee:
- To purchase and redeem TrueUSD for USD: the larger of 10 basis points or $75.
- 10 basis points on transactions of TrueUSD between Ethereum wallets.