Hedging BTC's Purchasing Power
We assume that the price volatility of goods against Bitcoin is significant enough to create a certain demand in hedging this volatility risk. Suppose there is a requirement to provide a certain amount of funds for the purchase of an asset, and we only have funds in the form of bitcoins, and the recipient wants a certain amount in local currency. Furthermore, the transaction has an escrow account mechanism with a settlement period of 10 days against the executed ownership title.
We can easily set up an escrow account in a bitcoin transaction, but the problem is that the seller will price himself in local currency because he is required to do so by law in the jurisdiction where he resides. The current solution to this is to use stablecoins, which means going through an exchange process and adding additional layers of trust.
With new native bitcoin proposals that offer similar properties to stablecoins, it becomes increasingly important to build something that does not require trust in centralized mints.
avvi |
npub1md2…6hx3
2024-06-27 13:34:56
Author Public Key
npub1md2q6fexrtmd5hx9gw2p5640vg662sjlpxyz3tdmu4j4g8hhkm6scn6hx3Published at
2024-06-27 13:34:56Event JSON
{
"id": "93dccc5e7ef84e9d094af00cbbe7af53545ab679a3c5f9251d5d8238a257cc91",
"pubkey": "db540d27261af6da5cc543941a6aaf6235a5425f098828adbbe565541ef7b6f5",
"created_at": 1719488096,
"kind": 1,
"tags": [],
"content": "Hedging BTC's Purchasing Power\n\nWe assume that the price volatility of goods against Bitcoin is significant enough to create a certain demand in hedging this volatility risk. Suppose there is a requirement to provide a certain amount of funds for the purchase of an asset, and we only have funds in the form of bitcoins, and the recipient wants a certain amount in local currency. Furthermore, the transaction has an escrow account mechanism with a settlement period of 10 days against the executed ownership title. \n\nWe can easily set up an escrow account in a bitcoin transaction, but the problem is that the seller will price himself in local currency because he is required to do so by law in the jurisdiction where he resides. The current solution to this is to use stablecoins, which means going through an exchange process and adding additional layers of trust. \n\nWith new native bitcoin proposals that offer similar properties to stablecoins, it becomes increasingly important to build something that does not require trust in centralized mints.\n\n",
"sig": "1a96fa1f42dca5d3a45cb4f942120f2a201695119346282a1dfad75450d0884b607862b568f7e697ef6160e58e975e382760ec3cc350f0f324938a4d55f941c4"
}