Requirement

While still experimental, the cryptocurrency sector has developed sufficiently to begin looking past the ‘crypto-casino’ and towards greater commercial utility. Cryptocurrencies generally serve all of the traditional functions of money poorly, extreme price volatility being fundamentally at odds with monetary utility. An additional source of uncertainty is the expectation that most coins will fail to survive, or at least fail in transitioning to ‘real currency’ status. Even ‘stablecoins’, typically tied to the USD, expose the holder to the risk of coin failure, and have lower monetary utility than the underlying national currency. Cryptocurrencies, including stablecoins, have little to no access to interest and other conventional methods for preserving financial value.

The ideal crypto coin would have predictable value characteristics that make it suitable for large scale international commerce. It would also be financially neutral, offering an implicit reasonable rate of return and independence from national currencies. Perhaps more radically, the ideal crypto coin would not be a single coin at all. Coin technologies and providers may well fail or be superseded. There is no viable standard of financial value while there is no clear ‘winner’ among the various coins, which there is never likely to be.

Adopting a common standard would provide crypto exchanges with a simple method for transferring value throughout the global crypto economy, while remaining independent of national fiat money. Exchanges need to offer their customers a financially neutral crypto-based option for uninvested funds and transfers. A global and financially meaningful unit of account for the valuation of cryptocurrencies would also add to the independent and international appeal of the system.

Many of these requirements also apply in the world of stock broking. The introduction of a financially meaningful unit of account would be of particular interest to investors; valuations should relate to global financial opportunity cost, not to the arbitrary fluctuations of national fiat money. The need for a simple, financially neutral option for uninvested funds and transfers applies equally to the stock broker customer base, sweep accounts being a complicated and uncompetitive solution.

The GRS clearly addresses all of these issues, as well as offering a simple interface between cryptocurrency and conventional finance. With both crypto exchanges and stock brokers on the global dollar standard, unallocated funds can easily be repurposed between investment categories without a convoluted detour through national currencies. In addition, it is clear that many customers will find any crypto-based product unappealing. A conventional form, namely global dollar notes issued by stock broker and even bank members, would enable a much broader process of adoption.