Nushares blockchain university

Nuveen: Achieving Better Bond Exposure

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In a recent blog postSt. Bitcoin, he observes, offers a host of benefits, most of which relate to its role as a nushares blockchain university device.

It enables individuals to transfer funds more cheaply than traditional payment mechanisms. But it also has shortcomings, the chief of which, Andolfatto claims, is its short-run price volatility. In theory, Fedcoin would employ the same blockchain ledger technology as bitcoin to transfer funds between accounts.

Although Andolfatto is right to claim that the Fed — or any central bank for that matter — has a comparative nushares blockchain university in issuing substitutes that are accepted at par with its other liabilities, it is certainly not in a unique position to issue a digital, P2P peer-to-peer or person-to-person cryptocurrency that is accepted at par. There are all sorts of par-valued, dollar-denominated private digital monies. In the US, private banks issue electronic balances that exchange at par with the dollar.

There are also P2P monies that trade at par. The notes and coins issued by a currency board are P2P in the sense of person-to-person and that they need not be cleared by a central authority.

And, since an orthodox currency board holds sufficient reserves by definition, it will maintain par acceptance. Private banks in Scotland and Northern Ireland issue circulating notes that exchange at par with the British pound. Clearly, private nushares blockchain university are capable of supplying either a digital or P2P money that trades at par with an established official currency.

In fact, there is even today at least one dollar-based, privately-provided digital, peer-to-peer cryptocurrency. In other words, NuBits are remarkably stable in terms of the dollar.

Figure 1 tells the whole story:. How does the Nu protocol maintain a fixed exchange rate between its NuBits and nushares blockchain university dollar? Those interested in all the details should consult the original white paper and discussion forum. I sketch out the basics below. The Nu protocol relies on nushares blockchain university premise that demand for NuBits will tend to grow over time. For a fixed-supply cryptocurrency, like bitcoin after it reaches the million-coin cap, an increase in demand increases its price and market capitalization i.

The increase in the market capitalization, or network value, of a fixed-supply cryptocurrency accrues nushares blockchain university coinholders as their coins appreciate. For NuBits, in contrast, an increase in demand only increases the market capitalization — not the price. Revenues generated through the sell of these newly created NuBits are used to cover operating expenses and pay dividends to NuShareholders. Hence, NuShareholders are residual claimants on the network value of NuBits and, as such, have an incentive to maximize the value of the NuBits network.

NuShareholders stand ready to create and sell NuBits anytime demand increases because it generates the revenue used to pay their dividends. In other words, we can be pretty confident there will be sell side liquidity in the market for NuBits. But how nushares blockchain university why would NuShareholders produce buy side liquidity?

Or, to state the matter another way, how and why do they contract the supply of NuBits in circulation when demand decreases? NuShareholders have several mechanisms to decrease the supply or effective supply of NuBits in circulation when demand decreases, thereby offsetting a reduction in price. When a user agrees to park a balance of NuBits, the balance is marked as parked on the blockchain and cannot be spent for the agreed upon park period.

When the agreed park period expires, control of the balance is returned to the owner along with the interest earned. Park rates vary by duration and are adjusted regularly by NuShareholders nushares blockchain university ensure that enough NuBits are effectively if only temporarily removed from circulation when needed. Recent updates offer additional mechanisms to reduce the supply of NuBits.

NuShareholders can vote to increase the transaction fee, which, rather than being distributed to participants as is the case with bitcoin and most other cryptocurrenciesis permanently destroyed.

They might also vote to convert some NuBits to NuShares. Nushares blockchain university the event of parking rates being offered for a prolonged period of time, NuShareholders can vote to create new NuShares that are sold through auction.

The proceeds from this auction would then be used to purchase NBT on the open market, at which point the purchased NBT would be destroyed permanently by the custodian. The net result would be a dilution of equity value for all NuShareholders in order to reduce the outstanding supply of NBT in circulation. This price support mechanism allows NuShareholders to reduce the supply of NBT to match periods of contracting demand. With these mechanisms, NuShareholders are able to manage the supply of NuBits in circulation to maintain par acceptance with the dollar.

Nushares blockchain university would NuShareholders incur the costs to maintain par acceptance in the face of a negative, transitory shock to the demand for NuBits? Nushares blockchain university all, there are nushares blockchain university lot of alternative cryptocurrencies available. The unique feature of NuBits is that it has a fixed exchange rate with the dollar.

Abandoning that commitment would render NuBits no better than the competition. To boost the network value — and maximize their dividends — NuShareholders must protect the fixed exchange rate.

Is the Nushares blockchain university protocol the answer to all our monetary economic prayers? Unlike the automatic if crude supply protocol of bitcoin and most other cryptocurrencies, the NuBits supply protocol depends on voting NuShareholders.

Second, it can — by definition — nushares blockchain university no more stable than the dollar. Although the Fed has a comparative advantage in issuing substitutes that are accepted at par with its other liabilities, it is far less likely, as Andolfatto acknowledges, to offer a permissionless, privacy-protecting cryptocurrency.

The Nu protocol provides a pseudonymous cryptocurrency that trades at par with the dollar. In other words, it is already doing precisely what advocates nushares blockchain university FedCoin hope a central bank-issued cryptocurrency would do.

Skip to main content. December 29, 8: Share Tweet Like Submit Plus. Figure 1 tells the whole story: