Toward a Stable Tokenized Medium of Exchange
Alexander Lipton · 2019
Abstract This chapter discusses the current state of the crypto land and argues that stable crypto tokens, which can be viewed as an electronic analogue of cash, can help augment the existing TCP/IP (Transition Control Protocal/Internet Protocol) with a much-needed mechanism in order to bring existing banking and payment systems into the twenty-first century. It describes three existing approaches to designing such tokens—fiat collateralization, cryptocurrency collateralization, and dynamic stabilization—and concludes that only regulatorily compliant fiat-backed tokens are viable in the long run. It also discusses asset-backed cryptocurrencies and argues that in some instances they can provide a much-needed counterpoint for today's fiat currencies, and pave a way forward toward ensuring world-wide financial stability and inclusion.