NuBits (NBT) is a decentralised closed-source cryptocurrency launched in late 2014 by Peercoin developer Jordan Lee. Unlike most other cryptocurrencies, NuBit coins are not mined, but rather issued by the project's shareholders whose primary goal is to maintain a 1:1 NuBit peg to the US dollar. In the case of hyperinflation of the US dollar, the shareholders can vote to peg NuBits to a different currency or to a basket of commodities. By creating more coins to keep prices down and by increasing interest rates on parked coins to restrict supply, the NuBit projects hopes to have created a stable cryptocurrency with limited volatility.
|Mkt.Cap||$ 26.03 M||Volume 24H||1.3 MNBT|
|Market share||0%||Total Supply||0.00000000NBT|
|Proof type||PoS||Open||$ 0.0029|
|Low||$ 0.0028||High||$ 0.0029|
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Correct me if I am wrong, but NuBits works much the same as the Federal Reserve and the U.S. Dollar, except in a decentralized manner, with Nushares holders taking the place of the Feds.
Backing of NuBits is strongly linked to the liquidity of NuShares. There isn’t yet a short simple explanation that includes the important details, and we apologize that our terminology or jargon can be complicated. Trading and investing in digital assets is highly speculative and comes with many risks.
Past performance is not necessarily indicative of future results. NuBits is a cryptocurrency which was designed to maintain a price of 1 US dollar. NuBits reached its highest price on 6 February, 2015, when it was trading at its all-time high of $ 9.77.
Just like FIAT, Nubits are not backed by collateral. The real experiment with Nubits/Nushares is if the value of FIAT (or in Nubits case, quasi FIAT) can be maintained without the use of laws, regulation, and force. It will be interesting to see how it plays out. Stablecoins can be prone to failure as well due to volatility and upkeep required in many cases. NuBits is designed to incentivize every party involved to create a system with which everyone benefits until the system no longer is relevant.
Likewise when the value of the crypto-asset reserve is above the target reserve level, NuShares are bought from the open market and eventually burned out of existence. In the final months of 2017 and early 2018, NuBit demand skyrocketed and quickly increased its market cap from $1M to $15M while NuShare trading remained unmatched, causing a critical misalignment of liquidity between the directly linked assets.
Nu owns part of decentralized B&C Exchange, an exchange that will deal with native blockchain assets with trades placed and executed using blockchain and multisig technology to be truly decentralized to the degree Bitcoin and NuBits are. Once development resumes it is set to become an exchange that beyond its core feature set enables NuBits to operate entirely without reliance even on centralized exchanges. Since 2014, the first NuBit peg was successfully maintained for years. Today it is experiencing issues with liquidity and we see USNBT trade lower than one US dollar. While NuBit holders should not need to concern themselves with technical details, we want all of you to know that NuBit pegs are supported by economic incentives implemented with necessarily different approaches involving NuBit traders and NuShare investors.
Cryptocurrency backed stablecoins are issued with cryptocurrencies as collateral, which is conceptually similar to fiat-backed stablecoins. In many cases, these work by allowing users to take out a loan against a smart-contract via locking up collateral, making it more worthwhile to pay off their debt should the stablecoin ever decrease in value. To prevent sudden crashes, a user who takes out a loan may be liquidated by the smart contract should their collateral decrease too close to the value of their withdrawal. Advantages of asset backed cryptocurrencies are that coins are stabilized by assets that fluctuate outside of the cryptocurrency space, that is, the underlying asset is not correlated, reducing financial risk. Bitcoin and altcoins are highly correlated, so that cryptocurrency holders cannot escape widespread price falls without exiting the market or taking refuge in asset backed stablecoins.
- The complexity and non-direct backing of the stablecoin may deter usage, as it may be difficult to comprehend how the price is actually ensured.
- Today it is experiencing issues with liquidity and we see USNBT trade lower than one US dollar.
- Bitcoin and altcoins are highly correlated, so that cryptocurrency holders cannot escape widespread price falls without exiting the market or taking refuge in asset backed stablecoins.
- It sets interest rates to control the demand of Nubits, so when the demand is low it increases interest rates to prevent the price going under a dollar.
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Please do your own research on all of your investments carefully. Scores are based on common sense Formulas that we personally use to analyse crypto coins & tokens.
The technical implementation of this type of stablecoins is more complex and varied than that of fiat-collateralized stablecoins, which introduces a greater risks of exploits due to bugs in the smart contract code. With the tethering done on-chain, it is not subject to third party regulation creating a decentralized solution. The potentially problematic aspect of this type of stablecoins is the change in value of the collateral and the reliance on supplementary instruments. The complexity and non-direct backing of the stablecoin may deter usage, as it may be difficult to comprehend how the price is actually ensured. Due to the nature of the highly volatile and convergent cryptocurrency market, a very large collateral must also be maintained to ensure the stability.
The individual tabs are designed to help you learn and interact with the Smart Contract and drive community discussion. It sets interest rates to control the demand of Nubits, so when the demand is low it increases interest rates to prevent the price going under a dollar. When demand is high it prints Nubits to prevent the price going over a dollar. Market makers are used to hold the value of Nubits at one dollar in the short term and provide liquidity, with the interest rate adjustments and printing Nubits holding the peg in the long term.
Holders of commodity-backed stablecoins can redeem their stablecoins at the conversion rate to take possession of real assets. The cost of maintaining the stability of the stablecoin is the cost of storing and protecting the commodity backing. NuBits are sold for roughly $1 worth of a crypto asset and bought back for roughly $1 worth of a crypto asset. The fiat value of the crypto-asset reserve fluctuates with the value of the crypto-assets and from NuBit customers buying and selling their NuBits. When the fiat value of the crypto-asset reserve is below the target reserve level, NuShares are created and sold.
Furthermore, such coins, assuming they are managed in good faith, and have a mechanism for redeeming the asset/s backing them, are unlikely to drop below the value of the underlying physical asset, due to arbitrage. The value of stablecoins of this type is based on the value of the backing currency, which is held by a third-party regulated financial entity. In this setting, the trust in the custodian of the backing asset is crucial for the stability of price of the stablecoin. Fiat-backed stablecoins can be traded on exchanges and are redeemable from the issuer. The cost of maintaining the stability of the stablecoin is equivalent to the cost of maintaining the backing reserve and the cost of legal compliance, maintaining licenses, auditors and the business infrastructure required by the regulator.