New Gemini Dollar, The Final Nail In Tethers Coffin

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The Cryptoverse

6 min readSep 12, 2018

On Today’s Episode of The Cryptoverse…

At 3 pm London time yesterday (September 10th), Cameron Winklevoss posted an article on Medium with the title….”Gemini Launches the Gemini dollar: U.S. Dollars on the Blockchain.”

Episode Transcripts & Notes

As I said on Twitter soon after, I think this is much bigger news than it may first appear, so I’d like to share my insights for you to consider.

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So the Gemini Dollar. The very first thing that I thought when I heard the name was “oooo, are they sure they want to call it a dollar?” I mean that’s what got Bernard von NotHaus put in jail for ‘counterfeiting US currency’ when he named his creation the “Liberty Dollar”.

Below is a link if you want to read more about his story:

https://en.wikipedia.org/wiki/Bernard_von_NotHaus

But let’s get to the bottom line here. The Gemini Dollar claims to be the first trusted, regulated digital representation of the U.S. Dollar that moves in an open, decentralized manner, like cryptocurrencies.

This is congruent with the mission statement which the Gemini Exchange was founded upon “to build a bridge to the future of money.”

There are some key details that lead me to say that this is bigger news than it may first appear, so let’s highlight those.

The Gemini Exchange is based in New York, one of the most heavily regulated places for crypto.

The BitLicense is a special licence you have to be granted in order to operate as a cryptocurrency business in New York. When that was introduced, it put a lot of crypto businesses out of business and it caused others to move out of the New York area.

Many crypto businesses to this day block New York residents from using their service so they avoid the wrath of the regulators.

Gemini have a BitLicense which required them to fill out a mountain of paperwork and then continue to stay within the tight limits of the regulations.

When you consider that the vast majority of the investment world is still completely brainwashed by the notion of regulation equals trust, it makes more sense for the Winklevoss Twins to appeal to that rather than fight it.

That’s a sign of their intelligence, in my opinion. The Winklevoss Twins understand the need to meet people where they are.

So this makes the Gemini Dollar the world’s first regulated crypto stablecoin, which will be under the watchful eye of the New York State Department of Financial Services.

This may well be the beginning of the end for Tether. Not because Tether is going to implode or anything like that, but because it’s just not going to be able to compete with the Gemini Dollar.

Why do I say that? Because the New York regulators are not going to stand for the endless delays to provide audits like Tether has got away with for years now.

Gemini will be subject to a monthly audit to verify that there is at least 1 USD for every 1 Gemini Dollar in circulation.

Gemini have already published the web page where audits will appear, as well as providing their first audit showing their opening balances for the launch.

Here the web page which I’ll link to in the sources:

https://gemini.com/dollar/#reports

And here’s the report…

https://gemini.com/wp-content/themes/gemini/assets/img/dollar/gemini-dollar-examination-report-09-09-18.pdf

This audit was conducted by BPM LLP, a 3rd party accounting, consulting and tax firm

https://www.bpmcpa.com/

I had a look around their website and found they have 7 offices in the United States, one in Hong Kong and one in the Cayman Islands. If you want to scrutinize this firm more closely, I’ll provide a link to their website in the sources.

The Gemini Dollar works like Tether in the sense that you deposit U.S. Dollars into your Gemini account and can then convert them into Gemini Dollars.

You can also do that process in reverse by transferring your Gemini Dollars to your Gemini account and then converting them back to US Dollars…(and then to your bank account if you wish).

Another gob smacking fact is that the USD deposits will be held at a US bank that is covered by FDIC deposit insurance. It’s a Wall Street bank called State Street, if you’re interested.

Next, you may be wondering how the Gemini Dollar interacts with the rest of the crypto ecosystem.

Well, Gemini made the decision to build the Gemini Dollar “GUSD” as an ERC-20 token, which means it lives on the Ethereum network.

Being an ERC-20 token means it immediately inherits all the compatibility of the ERC-20 ecosystem including the ability to store them on a Ledger hardware wallet.

And get this, you can start using GUSD, right now. It’s live.

Check this out:

https://etherscan.io/token/0x056fd409e1d7a124bd7017459dfea2f387b6d5cd

This is the Gemini Dollar (GUSD) smart contract showing how many are currently in circulation, how many wallets are using it, and a list of transfers happening in real time.

At time of recording we already have $100,033 GUSD in circulation.

However, let’s not get too excited, because $100k of that was the initial batch of GUSD that was created to start things off.

This is what is stated in the initial audit which you will find on page 2…

https://gemini.com/wp-content/themes/gemini/assets/img/dollar/gemini-dollar-examination-report-09-09-18.pdf

So this is the kind of audit we are going to expect to find on their website every single month, and the audit should match the number of GUSD in circulation according to the Ethereum smart contract, and THAT data we can pull for ourselves.

And in terms of the security of those smart contracts…

https://gemini.com/wp-content/themes/gemini/assets/img/dollar/gemini-dollar-trailofbits-audit.pdf

Here is a document confirming that a security company called Trial Of Bits spent 8 person weeks assessing how robust the GUSD code was.

Bottom line, the security audit found 9 security issues in total which were fixed by Gemini engineers and then verified to the security firms satisfaction.

Another key point here is that the GUSD is not going to be used exclusively by US citizens or those with a USD denominated bank account.

You don’t need a US dollar account in order to use Gemini Dollars. All you need is the confidence that the GUSD token will maintain a stable value and you are good to go.

I’d argue that 95% of people using Tether never intend to convert them back to US dollars, but rather just use them as a crypto stablecoin until they trade back into Bitcoin or some altcoin.

If all goes well, the Gemini Dollar may finally fulfill the promise of Tether and put an end to those shocks that occur whenever the market thinks Tether is about the collapse.

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