The Stable Money protocol
A BTC Backed Currency with Stable Value where Excess Reserves are Returned to Currency Owners
- A tamper-proof means of exchange with stable value collateralised with Bitcoin (BTC)
- Currency holders share the near equivalent gains as if they held BTC
- While sharing in the upside potential of BTC users avoid BTC’s downside volatility.
Companies face a $300 trillion addressable problem – money is not sound. Balance sheet strategies for meeting this challenge have been outlined by Michael Sayler, CEO MicroStrategy.
Sayler points out that Bitcoin is fast becoming a preferred treasury asset because it satisfies the need for corporations to hold value in a secure monetary network that appreciates faster than the rate of fiat monetary expansion. But as Sayler acknowledges sound balance sheet strategies only solve half the problem.
From a P&L perspective how can revenues also become part of the BTC monetary network? Revenues earned in fiat represent a risk to the business through their continued loss of value. They disadvantage the company relative to competitors who earn in sound money.
Converting revenues to BTC is clumsy and has tax implications when the BTC needs to be sold for operational requirements.
Customers paying in fiat hamper growth through loss of purchasing power – their money buys less in real terms each year. Yet Walmart cannot price its Tuppleware or Apple its iPad in a currency as volatile as BTC. No P&L account would be readable in a unit of account that can lose 20% of its value in a day.
For the same reason no consumer would wish to earn in a coin prone to such fluctuations. Budgeting would become as impossible for the weekly shopping as it would for corporate expansion projects.
On the other hand it would be advantageous to transact in a currency that was part of the BTC monetary network and participated in its value appreciation.
Sound money as a basis of exchange requires not only immunity from inflation but also stable value. History has demonstrated that periods of prosperity coincide with periods when currencies have stable value. What is true at a macro-economic level is also true for the corporate P&L statement.
The stable money protocol outlines a means of creating a currency with stable value. It completes the BTC proposition for corporations by providing BTC based revenue yet with the consistent value required to set prices and fund operations.
The currency uses BTC as collateral. Excess reserves from any appreciation in the value of BTC are periodically returned to currency holders. This gives corporations the double benefit of a stable currency for revenues with the asset appreciation of BTC. Customers are equally incentivised to switch to the new currency because of the appreciation potential of BTC. They now use a currency that rewards them. Further, both corporations and consumers benefit from a currency that avoids BTC’s downside volatility without compromising the upside.
The migration to a P&L strategy based on sound money is agnostic to industry sector. The P&L strategy is open to all.
The protocol is currently in the process of inviting leading organisations to become its foundation members. For more information please contact me.