NuBits (USNBT) is the world’s first stable decentralized digital currency create by a veteran group of Peercoin developers and released on 23, September, 2014. Following the issues faced by Tether in the past few days, NuBits is gaining prominence. For mass adoption of a currency, the value should preferably remain more or less stable. The volatility exhibited by Bitcoin and other crypto currencies has made it less suitable for adoption.
Crypto enthusiasts argue that an increase in liquidity will end volatility. However, the developers of NuBits believe that volatility will decrease, but would still exist as in the case of large cap stocks such as Google or Microsoft. The developers opine that Bitcoin and other crypto networks Permit the purchase of scarce units used in the networks which function much like shares. If the value of the network rises, the value of these “shares” rise. This dynamic has been critical to the success of these networks as it allows anyone to purchase a stake and benefit from promoting the network.
These networks have simultaneously been promoted as currencies, but have not gained mass adoption. The solution is a network with two types of units which are not fungible: shares and currency. Shares represent ownership of the network and their quantity should not change to accommodate changes in the level of demand for them. If demand increases, the price should rise proportionately. They should also provide dividends from network revenues. The supply of currency should dynamically adjust up and down in response to changes in the level of demand for the currency so that the price is always stable. Nu incorporates such a facility.
Nu is controlled by shareholders who own NuShares and mint blocks with them using proof of stake. Unlike other Peershares networks, Nu also verifies and transmits transactions of currency units called NuBits. Nu permits holders of NuShares to manage the quantity of NuBits without dependence on any of block chain mechanisms. Additional NuBits can be created when shareholders vote to do so and will be placed in the custody of a recipient chosen by shareholders called a custodian. There can be as many custodians as the shareholders elect to have and they can be changed at the whim of shareholders.
Being a custodian doesn’t impart any control over the network, only over a finite quantity of network revenues. NuBits created and sold are network revenues that can be used by custodians for Nu operating expenses and dividends. Dividends will be paid only in Peercoins, which means custodians must purchase Peercoins in preparation to distributing them. Therefore, demand for Peercoins will increase proportionate to the amount of dividends paid by Nu. Conversely, the system can reduce the available supply of NuBits through a separate mechanism called parking, where holders of NuBits volunteer to take their currency out of circulation for a user configurable period of time in exchange for a monetary incentive.
This is similar to extending a loan at interest. Shareholders can dynamically adjust the level of interest offered on parked NuBits (which varies by the duration) by voting for whatever yield curve they think is appropriate when they mint a block. When organic NuBit demand is in decline, shareholders will create synthetic demand for them by offering interest on parked NuBits.
The NuBit price will be suppressed to one USD from custodians maintaining huge sell walls at one USD and supported at one USD by shareholders offering interest on parked NuBits to create synthetic demand when there are market signals that demand is in decline. While early in the network’s life minute to minute NuBit demand could decline suddenly and cause the price to momentarily drop below one USD, shareholders will quickly push the price back into the custodial one USD sell wall by increasing the parking interest rate.
This will punish anyone who sold below one USD and reward anyone who purchased below one USD. Soon it will become clear that selling NuBits below one USD is always a losing trade and buying them below one USD is always a winning trade, which will prevent its decline.
NuBits has no vendor fees and no customer charge backs. Buying and using NuBits at $1.00 US means there will be no longer a need to keep track of tax gains or losses on each purchase. Buying products and services using digital currencies are also easier with NuBits. There is no cost to download a NuBits wallet or any restrictions in sending NuBits. Practically no documentation is required to own NuBits.
With a few code changes, additional currencies can be added to Nu. Even a stable currency that retains its purchasing power over a long-term, through dynamic alteration of the peg rate (to adjust for inflation or deflation), can be created.