I consider the Gemini Dollar (GUSD) is the most honest stablecoin around.
To explain, Gemini Trust Company admits it does not hold US Dollars in the GUSD. Instead, Gemini admits it keeps the dollars in trust accounts at the State Street Bank and Trust Company (NYSE: STT).
The Gemini Dollar is an ERC20 (Ethereum Request for Comment) cryptocurrency that contains a smart contract, or digital robot. When somebody spends a Gemini Dollar; the smart contract releases payment in dollars from a State Street Bank trust account.
Hence, the Gemini Dollar (GUSD) is a digital “check” you can send through the blockchain. To elaborate, a check is an order for a bank to release funds from an account. Similarly, the GUSD is blockchain order to release payment from a bank account.
In contrast, most stablecoin operators claim their products contain fiat currency. In reality, all stablecoins are orders to release payment rather than fiat currency. Stablecoins are popular because many merchants and organizations only take payment in fiat currencies.
The Winklevoss Twins’ Stablecoin
The Gemini Dollar (GUSD) is the stablecoin the infamous Winklevoss Twins (Cameron & Tyler) created.
If the claims on the Gemini website are true, the GUSD could become one of the most disruptive stablecoins. For instance, Gemini claims you can pay with Gemini Dollars at brick and mortar businesses through Flexa.
Retailers that could accept GUSD payment through Flexa include Bed, Bath & Beyond (NYSE: BBBY), AMC movie theaters, and Nordstrom (NYSE: JWN). Flexa makes payments through the SPEDN app.
I think the SPEDN is a digital wallet for cryptocurrencies and stablecoins. I think SPEDN and Flexa could give Gemini enormous value by driving many payments.
The Gemini Dollar (GUSD) works with some other interesting apps. For instance, Gemini partners with BlockFi, which pays interest on GUSD holdings.
Gemini Joins with Brazil’s largest Investment Bank
Other Gemini users include the investment platform Harbor, the freelancer payment platform Latium, and the travel-blockhain-based travel-booking platform. Gemini claims you can pay for Expedia and Booking.com reservations with GUSD through Travala.
In addition, BTG Pactual (BVMF) uses GUSD to support its ReitBZ cryptocurrency. Brazil-based BTG Pactual (BVMF) claims to be Latin America’s investment bank.
ReitBZ is a security token BTG Pactual backs with investments in Brazilian real estate. Essentially, ReitBZ is a blockchain real estate investment trust (REIT). BTG Pactual claims to be the largest real estate manager in Brazil.
The True Value of the Gemini Dollar (GUSD)
I think the term stablecoin is misleading because stability is not stablecoins’ key attribute.
To elaborate, the appeal of stablecoins is liquidity. Liquidity is the ability to spend a currency in many places. For example, a supermarket could accept GUSD payment. Hence, you could use the Gemini Dollar to buy food for your children.
Most cryptcourrencies are useless for people because you cannot spend them at most brick and mortar retailers. For instance, I imagine your local supermarket does not accept Bitcoin (BTC) payments.
Thus, if you want to use the funds in your Bitcoin account to buy food, you will need to sell your BTC for fiat currency. However, the supermarket could accept Gemini Dollars because it can get fast payment in US dollars.
Hence, I think the Gemini Dollar’s actual value is its compatibility with apps such as Flexa. Obviously, Gemini Dollar’s value could explode if they could integrate GUSD with PayPal’s (NASDAQ: PYPL) digital wallet or Apple Pay.
How stable is the Gemini Dollar (GUSD)?
Mr. Market; however, is skeptical of the Gemini Dollar. Notably, CoinMarketCap gave the Gemini Dollar a Coin Price of 98.12₵ on 23 September 2020.
Thus, a Gemini Dollar’s (GUSD) price does not represent a US Dollar (USD). Instead, Mr. Market sees the Gemini Dollar as separate from the USD. Hence, Mr. Market views a stablecoin as a digital instrument with a tenuous connection to the USD.
Therefore, I think Mr. Market believes the Gemini Dollar is unstable. Consequently, I think stablecoins are unstable.
CoinMarketCap gave the Gemini Dollar (GUSD) a Market Capitalization of $13.902 million, a 24-Hour Market Volume of $3.282 million, and a Circulating Supply of 14.063 million GUSD on 22 September 2020. Hence, the GUSD has some value, but it is tiny when compared to the most popular stablecoin Tether (USDT).
On 23 September 2020, CoinMarketCap gave Tether (USDT) a $1 Coin Price, a $15.218 billion Market Cap, a 24-Hour Market Volume of $39.911 billion, a Circulating Supply of 15.205 billion USDT, and a total supply of 15.876 billion USDT.
What is the Gemini Dollar (GUSD)?
I consider the Gemini Dollar (GUSD) a proof-of-concept for a blockchain product rather than a cryptocurrency.
The Winklevoss Twins are trying to develop a fintech product they can sell to banks and companies rather than market cryptocurrency. I think the Twins realize, correctly, that the big money in blockchain will come from money transfer and payment solutions.
PayPal (PPYL) or JP Morgan Chase (NYSE: JPM) could use the Gemini Dollar (GUSD) to expand their payments’ platforms, for example. Thus, the Gemini Dollar (GUSD) is a speculative fintech investment.
Given that reality, I recommend speculators avoid the Gemini Dollar (GUSD) until a major retailer, a monster bank, or a high-profile payments platform adopts it. Until then, the GUSD is the Winklevoss Twins’ blockchain payments solution.
Originally published at https://marketmadhouse.com on September 23, 2020.