This "origami stablecoin" article gives me strength to write a similar article about the Turkish IOU system (called the Vadeli Çek), which works with blank A4 papers (like your origami IOU) or with bank issued paper cheques. In either case, an issuer with her signature "issues" Layer 3 credit based on her Layer 2 bank account, using Layer 1 Turkish central bank lira as denomination. This mechanism is used (to create personal credit) in Turkey by over 500,000 people and transact more than 1 Triilion TL every year. The mechanism works exactly like what you described in your origami IOU exercise, except for a time value added on the IOU. Hence, there is an expiration date on the Turkish IOUs and the issuer is not liable to put money in her account until that date. This mechanism is protected with a special "Vadeli Çek" law.
Sep 18, 2023·edited Sep 18, 2023Liked by Brett Scott
As the 'stability' of the coin relies on the assurance that it is backed by (say) USD, given the decentralised nature of the blockchain, how is the security assured? While you allude to various ways, it seems that so called 'stablecoins', simply add a layer of instability. A Central Bank Digital Currency can be created in a way that maintains the same level of privacy as now exists in the banking system, while still subjecting the money to the laws of the land. People may not like their laws, but trying to use money to skirt them is hardly conducive to creating a strong society which has to be built on trust.
Dear Brett,
This "origami stablecoin" article gives me strength to write a similar article about the Turkish IOU system (called the Vadeli Çek), which works with blank A4 papers (like your origami IOU) or with bank issued paper cheques. In either case, an issuer with her signature "issues" Layer 3 credit based on her Layer 2 bank account, using Layer 1 Turkish central bank lira as denomination. This mechanism is used (to create personal credit) in Turkey by over 500,000 people and transact more than 1 Triilion TL every year. The mechanism works exactly like what you described in your origami IOU exercise, except for a time value added on the IOU. Hence, there is an expiration date on the Turkish IOUs and the issuer is not liable to put money in her account until that date. This mechanism is protected with a special "Vadeli Çek" law.
Glad you’re creating articles again. This was a good one! (Saying as someone who stays far away from getting involved in crypto)
"[...] which is what central banks use to upcycle their retired physical credits into colourful briquettes" ❤️
As the 'stability' of the coin relies on the assurance that it is backed by (say) USD, given the decentralised nature of the blockchain, how is the security assured? While you allude to various ways, it seems that so called 'stablecoins', simply add a layer of instability. A Central Bank Digital Currency can be created in a way that maintains the same level of privacy as now exists in the banking system, while still subjecting the money to the laws of the land. People may not like their laws, but trying to use money to skirt them is hardly conducive to creating a strong society which has to be built on trust.