Despite Blowhorning Bitcoin Isn’t “Real Currency”, Economist Aims to Design Price-Stable Crypto Assets
Steven Hanke is an economist, and he does not believe in Bitcoin. In fact, to be more specific, he does not see Bitcoin at the same level as a “real currency,” which could seem fair, considering that cryptocurrency and fiat currency have many differences.
Taking it a step further, he even claimed before that the hacks and other scams in the crypto market provide that they are “unstable and unsafe.” Somehow, this same skeptic is now taking on the workload at a crypto startup.
In an annoucement that was exclusively provided to CoinDesk, AirTM recently welcomed Hanke to their board of advisors. His role will be to work with the expansion of the startup in Latin America and to design price-stable assets. CEO Ruben Galindo of AirTM said,
“He’s very close to the problems that we are trying to solve.”
Considering the inflation in both Mexico and Argentina, the markets may be perfect for their marketing campaigns right now.
Throughout his work as an economist and Johns Hopkins University professor, he has urged governments to stabilize currencies in two main ways – exchange controls and fiat-pegged reserves. Galindo commented,
“Imagine you’re playing with golf and get to play with Tiger Woods. That’s how we feel with Hanke.”
This unusual collaboration matches a popular time for stablecoins, especially with multiple new assets being launched in this category to compete against Tether (USDT).
Primarily, traders use stablecoins to move their funds quickly without a bank, AirTM believes that there are many opportunities still. Hanke told CoinDesk,
“It is a good idea conceptually, but no one knows how to do it… I know how to do it. I’ve done it.”
At the moment, there are two stablecoin projects in the works with AirTM. Galindo said,
“AirTM dollars will be an ERC20 token that will be backed by dollars in our reserve, with the help of our banking partner Synapsify. I see a great value for stablecoins in developing nations.”
AirTM already has $3 million of their “dollars” in circulation, though they have a total supply worth $10 million.
Hanke has plans to create a currency-board style system, which will be responsible for launching the stablecoins with AirTM. A currency board, which CoinDesk explains is “a type of monetary authority that prioritizes fixed exchange rates over the other objectives of central banks,” would ensure that the price stays stable, according to Hanke.
There is not much information about how the assets will look like or how AirTM plans to integrate them into their ecosystem. However, Hanke theorized that he will end up using blockchain technology. Though it will not be speculative, he commented,
“It would be a unit of account that is stable and could be used for clearing.” Continuing, he spoke about the speculative nature of Bitcoin, considering that it caps off its market supply at 21 million. He said, “You have a completely inelastic supply curve. Who in their right mind would make a contract with bitcoin?”
The reason that Hanke seemed to gravitate towards AirTM has to do with the data that they have collected regarding the currency trading in Venezuela already. By May 2018, the company showed that 65% of their daily users came from the country.
As the company expands into Latin America, they need guidance on the macroeconomics of the change, along with the best ways to provide stable assets that can cross borders. Considering that Hanke, at the time of the partnership, needed a way to apply his research to the ongoing crisis in the area, the two partnered up.
Hanke sees his blockchain solutions as a way to meet the original goal of Bitcoin’s whitepaper, which suggested that cryptocurrency would be a “purely peer-to-peer version of electronic cash,” allowing “online payments to be sent directly from one party to another without going through a financial institution.”
Galindo, who has been using Bitcoin for years, is excited to provide these tools in countries that are dealing with inflation, calling AirTM a “dollarization machine” for Latin America. He added, “If people have a use for bitcoin for some reason, we’ll give them access to it. In the future, it will be so much easier to issue new currencies on a digital currency-board type of thing than with paper.” Still, Galindo stays away from calling any crypto assets “currencies.”
This opportunity for Venezuelans will offer a lawful way to use any asset, which is perfect for a country that comprises of $9 million in monthly transactions with AirTM. Concluding, Galindo said,
“We don’t care who owns the asset. If it is the Venezuelan government who wants to have a USD reserve and they want to audit it, we would not mind giving people access to that. If in the future, a president calls Professor Hanke up and says we want to solve hyperinflation, he will know that AirTM has the infrastructure to do that.”