The platform allows the user to exchange a cryptoactive into a fiat currency without using an exchange house.
Through a new decentralized and auditable network called PegNet, the startup Factom will seek to allow the exchange of cryptocurrencies that are anchored to some of the most important fiat currencies in the world.
Therefore, it will also allow trade between digital currencies that are linked to US dollars, euros, the Mexican peso, among others.
The central idea is based on a network that allows the exchange of value, reducing the conversion process between one asset and another. In this way, the network user can make payments and operations without the need of mediators or third parties.
The technical and informative team of PegNet to indicates that the platform will allow the user to make transactions in more than 32 different assets. Among these assets stand out stablecoins and local currencies. They also explain that the commission levels are the lowest. This is because the charge would be around one dollar per 100 operations.
The platform is available from anywhere in the world, allowing the client to perform an operation with any of the cryptocurrencies available on PegNet. The advantage of the platform is that the merchant who receives some payment through this network will have the option to choose in which cryptocurrency he wants to receive it. This means that if the user receives a payment in Bitcoin, he can keep the asset in that cryptocurrency or choose and exchange it for another one available, such as Ether, even for a fiat currency like the US dollar.
The network developers affirmed they proposed the creation of a “basket” system where users can store up to five (5) assets, according to the user’s convenience, ensuring that it could be wide or short range.
“A simple example of fiat currency could be a basket of five 5 coins with a similar value, such as USD, EUR, JPY, GBP and CAD rebalanced daily. For example, USD 1,000 becomes USD 200 of each asset with a rebalancing performed daily at midnight. The rebalancing converts the surplus of any asset that is above average. Only the surplus is converted”, ensures the white paper of PegNet.
The Operation of the Pegnet Network
Pegnet is an open source blockchain network, which operates under a decentralized platform, with all data encrypted and deposited in nodes.
In addition, it is created on a Bitcoin network basis, but it is also interoperable with other blockchain networks.
For the conversion within the platform, the user must select the asset or the currency he will use for the payment. Then, he must select which other asset will be converted in the operation. Therefore, the system calculates the value of those assets. When the transaction is completed, the system destroys the original asset and makes the payment in the other currency selected. In this way, the system would avoid the use of exchange houses.
It is known that PegNet uses the proof of work protocol to gather information necessary to perform value calculations among assets; hence, it evaluates the global market prices to take it as example.
The PegNet system contains a wallet that allows the user to access all valuable assets so that the user can perform the operations he wants with any asset.
By María Rodríguez