Honestly, why a stablecoin?
Catching up with Jian Shi who is behind HonestCoin (USDH)
We sat down with the mind behind HonestCoin, Jian Shi to learn more about stablecoins, what purpose they serve and how HonestCoin is solving existing challenges. Read on to learn more.
Could you tell us what stablecoins are and what purpose they serve?
To my understanding, stablecoins are a type of cryptocurrency with a relatively stable price. The value of the stablecoin is often pegged to stable assets outside the cryptocurrency world, such as mainstream fiat currencies, gold or other precious metals.
And what purpose stable coins serve, I think at first stable coins are mostly used to trade with other cryptocurrencies such as Bitcoin, Ethereum or BCH, because these cryptocurrencies have high volatility. Therefore, stablecoins are used as a medium to store value when users don’t want to be exposed to the volatility risk. In some countries, it is difficult or costly to trade cryptocurrencies using the local fiat currency directly, so stable coins have gained a lot of users in these areas.
Besides being used to trade with other cryptocurrencies, I think more and more people are exploring ways to use stablecoins in the real world, for remittance, payments, or as a store of value.
There are already quite a few different stablecoins in the market. What makes USDH different?
I think the current stable coins are still mostly used in trading with other cryptocurrencies in the secondary market. And for USDH we want to focus more on real-world applications, such as using USDH in cross-border remittance and payment scenarios.
Additionally, from a technical aspect, USDH is currently the only regulated stablecoin based on the BCH SLP protocol, making it faster and cheaper to use than other stablecoins, that are mostly issued on the Ethereum or the Bitcoin blockchain.
One of the central spirits of blockchain has always been decentralization. How does a stablecoin fit into that considering all funds are held in a centralized way?
I think decentralization is a good thing, but the technical approach to decentralization is still at a pretty early stage. People are working hard on that but as of now, no perfect solution for building a totally decentralized system without compromising some other important features exists. Take MakerDao as an example, the DAI stablecoin is a relatively decentralized stablecoin, but I think they are facing major problems accompanied by the recent cryptocurrency market crash.
For us (USDH), right now our solution is not totally decentralized, but I think currently it is the best solution to serve the needs of the remittance and payments scenario. And if in the future there are better systems that can fulfil our needs and are more decentralized, we will adjust our system structure accordingly.
Why did you decide to build on the Simple-Ledger-Protocol as opposed to choosing other more common token protocols for stablecoins?
First of all, I think BCH is a competitive blockchain. It supports large blocks, has low transfer fees and functions such as 0 confirmation. From the perspectives of both transfer fees and speed, it is superior to the BTC Omni protocol and the ERC20 protocol on ETH. Some of these characteristics are especially important to scenarios we want to use USDH in, such as serving the unbanked and underbanked users.
Actually, at first, we were working on the Wormhole protocol which was a protocol also based on BCH blockchain developed by Bitmain. It came out earlier than the Simple-Ledger-Protocol, but due to internal issues within Bitmain the project has been abandoned, so we’ve switched to SLP.
Now we also have an ERC20 version of USDH, supported by more wallets.
What is the current most common use case of USDH and where do you see USDH in one year from now?
Currently, USDH is mostly used for cross-border remittances. We have some corporate clients working with us using USDH for remittance between some countries.
In one year from now, we are hoping to explore more scenarios where USDH can really help the unbanked and underbanked people, we are seeking cooperation with partners in countries such as Venezuela, Kenya and Cambodia, I think USDH can help some people in these countries to achieve financial inclusion.
Do you think stablecoins will be competing with Central Bank Issued Digital Currencies (given those are actually issued)?
Yes, there will be competition.
But I think it’ll take some time for the Central Bank Backed Digital Currencies to really go online. And even when that happens, there should be certain restrictions to their functions. As you mentioned before, the spirit of blockchain is decentralization. I believe that decentralization contradicts with the interest of the current financial system, so there will be a lot of obstacles for them to push the government-backed cryptocurrency.
How many people are already using USDH and where can they currently buy and trade it?
We estimate that around 2,000 people are using USDH. The main use case for now are cross-border remittances. Before the coronavirus pandemic, the average daily volume of USDH remittance was around 500,000 USDH.
Users can register on the USDH official website www.honestcoin.io to trade USDH/USD at 1:1 any time in any quantity. Or trade USDH over-the-counter with CNY. Users can also trade with the USDH team over-the-counter on telegram(@honestjohnny) with either USD or CNY.
USDH can be traded on exchanges including:
coinsuper.com (coming soon)