Could Bitcoin Become a Reserve Currency?
2022-04-18
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1There is a growing movement to make bitcoin a reserve digital currency.
2One cryptocurrency platform is hoping to own $10 billion worth of bitcoin to back its own "stablecoin."
3Stablecoins are a growing group of cryptocurrencies that aim to lessen price changes and are usually backed by U.S. dollar reserves.
4The platform is called Terraform Labs.
5It is based in Seoul, South Korea.
6So far, it has built up nearly 40,000 bitcoin worth $1.7 billion in a series of purchases through a non-profit called Luna Foundation Guard.
7Do Kwon is Terraform's co-founder.
8Last month, he announced on Twitter that the company would buy $10 billion worth of bitcoin reserves to back TerraUSD.
9These purchases -- and the possibility of more to come -- are helping raise the price of bitcoin, now worth $48,000.
10It is unclear, however, if others will follow Terraform's lead.
11"Buying $10 billion worth can move the price in the short term," said Sid Powell, CEO of Sydney-based crypto lender Maple Finance.
12"But over the longer period, it's more what it signals - that bitcoin has been introduced as the hottest form of collateral backing for currencies."
13Yet other market experts said that a closer relationship between bitcoin and stablecoins like TerraUSD could introduce a new risk for crypto markets.
14"There is a danger some people are trying to position long ahead of the buying which could exaggerate a fall if the price starts to" decrease, said Richard Usher.
15 He is with the crypto company BCB Group in London.
16Stablecoins are quickly gaining popularity.
17They are a common form of exchange.
18They are often used by traders seeking to move funds around and predict the value of other cryptocurrencies.
19For example, it is much easier to spend tether -- the biggest stablecoin -- for bitcoin or other crypto, than it is to spend U.S. dollars for bitcoin.
20TerraUSD is now the fourth-largest stablecoin.
21Like other stablecoins, it is attached to the dollar.
22The bitcoin reserves add another level of security, while keeping the Terra project decentralized.
23Matthew Sigel is a market researcher.
24He said he expected other stablecoins to follow Terra's lead and back up their coins with reserves of bitcoin.
25They could even back it with other cryptocurrencies, if the experiment succeeds.
26I'm Dan Novak.
1There is a growing movement to make bitcoin a reserve digital currency. One cryptocurrency platform is hoping to own $10 billion worth of bitcoin to back its own "stablecoin." Stablecoins are a growing group of cryptocurrencies that aim to lessen price changes and are usually backed by U.S. dollar reserves. 2The platform is called Terraform Labs. It is based in Seoul, South Korea. So far, it has built up nearly 40,000 bitcoin worth $1.7 billion in a series of purchases through a non-profit called Luna Foundation Guard. 3Do Kwon is Terraform's co-founder. Last month, he announced on Twitter that the company would buy $10 billion worth of bitcoin reserves to back TerraUSD. 4These purchases -- and the possibility of more to come -- are helping raise the price of bitcoin, now worth $48,000. It is unclear, however, if others will follow Terraform's lead. 5"Buying $10 billion worth can move the price in the short term," said Sid Powell, CEO of Sydney-based crypto lender Maple Finance. "But over the longer period, it's more what it signals - that bitcoin has been introduced as the hottest form of collateral backing for currencies." 6Yet other market experts said that a closer relationship between bitcoin and stablecoins like TerraUSD could introduce a new risk for crypto markets. 7"There is a danger some people are trying to position long ahead of the buying which could exaggerate a fall if the price starts to" decrease, said Richard Usher. He is with the crypto company BCB Group in London. 8Stablecoins are quickly gaining popularity. They are a common form of exchange. They are often used by traders seeking to move funds around and predict the value of other cryptocurrencies. 9For example, it is much easier to spend tether -- the biggest stablecoin -- for bitcoin or other crypto, than it is to spend U.S. dollars for bitcoin. 10TerraUSD is now the fourth-largest stablecoin. Like other stablecoins, it is attached to the dollar. 11The bitcoin reserves add another level of security, while keeping the Terra project decentralized. 12Matthew Sigel is a market researcher. He said he expected other stablecoins to follow Terra's lead and back up their coins with reserves of bitcoin. They could even back it with other cryptocurrencies, if the experiment succeeds. 13I'm Dan Novak. 14Dan Novak adapted this story for VOA Learning English from reporting by Reuters. 15____________________________________________________________________ 16Words in This Story 17reserve- n. a supply of something that is stored so that it can be used at a later time 18collateral - n. something that you promise to give someone if you cannot pay back a loan 19exaggerate - n. to think of or describe something as larger or greater than it really is