China’s Bitmain, the world’s most profitable Bitcoin mining company with a reported net return of $4 billion in profits, has recently decided to reinvest some of their capital. Bitmain has led a USD 110 million fund for Circle Internet Financial Ltd. (a Boston based cryptocurrency exchange firm) to create a stronger and more stable coin.

Circle and Bitmain have now formed a partnership with the goal of creating a fiat-based digital tokens. These tokens will be the first of their kind to be backed by the U.S. dollar. Circle declared that it will have the tokens ready for issue this summer. It also stated that the investment will raise its valuation from $480 million (2016) to $3 billion. These tokens come as an advancement of stable coins which carry the benefits of cryptocurrency, but  not the typical volatility. Circle’s USD coins (USDC) will be tied one-to-one to the dollar. The greenbacks should then be stored in bank deposits, redeemable only by authorized buyers.
This version of fiat, as explained by circle CEO, is expected to move in the speed of internet but with reduced costs and increased levels of security. Circle plans to integrate USDC in its payment app (circle pay). It was, however, noted that the tokens would be designed following certain rules that will be set and governed by a non-profit referred to as Centre. Centre is a platform for the transfer of cryptocurrencies and fiat currencies into digital form.

Members of Centre will be expected to issue their stable coins in addition to Circle and Bitmain. Stable coins are the first phase of Bitmain’s vision for a private‘private central banks’. ‘Private central banks’, as they call it, is simply a blockchain-based algorithmic currency issuer that has no links with any government. There is an urgent need of a well-defined framework set to limit the risks of money laundering.

Development of a universally adopted stable coin is crucial in the crypto-world. The most important aspect of stable coins is that it would allow crypto-traders to protect their merchandise and assets and at the same time avoid fees and delays in the conversion of their crypto assets into fiat currency. However, due to existing nontransparent, fiat-backed firms, Circle has decided to address all of these issues. Circle will operate transparently and work within the US money transmission laws. In addition, Circle will be subject to frequent auditing. It will operate on an open membership basis with eligible financial institutions being able to participate.

A deep integration and transformation of this world will be experienced through an open internet of value exchange. This will, in turn, lead to the elimination of artificial economic borders which will then lead to a more inclusive global market place.


by Lisa Mendoza


Please enter your comment!
Please enter your name here