A new stablecoin, Element Zero, eliminates the need for any kind of wallet in a digital currency transaction. Last week’s Binance hack sent the crypto world’s pulse running: the idea that one of the largest digital coin exchanges could suffer a hack of such magnitude rattled the market. But the Binance hack would never have happened if the BTC was never stored in a hot wallet.
Let me explain: In the current digital coin transaction models, coins are moved into two types of wallets. One is a hot wallet, which is similar to a bank. The other is a cold wallet, which is like a safe in your house. In either scenario, during the transaction, the digital currencies are not in the hands of the coin owner, putting them at risk for a hack. These wallets, which like the bank and the safe in your house, can be cracked wide open by experienced hackers. Assets are stolen and trust of the system is broken.
The good news is, a new stablecoin is about to eliminate the need for any kind of wallet in a digital currency transaction. I recently came across the Element Zero Next-Generation Payment System which was developed with the input of financial industry giants like Dee Hock of Visa, and Nobel Prize winners, who recognized the value of creating a truly decentralized cryptocurrency. A key to creating a truly stable coin was to develop a transaction model that does not use a wallet of any kind. Instead, Element Zero developed a proprietary SmartSwap contract that keeps the transaction between the sender and receiver.
So, all transactions conducted on the Element Zero platform are performed using SmartSwap, which places the Smart Contract as the higher authority in the process. Think of the SmartSwap contract as a trustee that oversees assets, but does not have any direct control over them. These contracts are immutable, meaning they are fixed and permanent.
Underneath this powerful swap is a payment system based on Element Zero’s Stability Protocol that eliminates the possibility for any volatility in the first place. This is achieved because its EZO stablecoin value is truly decentralized and is not pegged to any asset or algorithm, and therefore, is not subject to market fluctuations or inflation. The P2P transaction conducted on the Element Zero platform uses the SmartSwap contract to ensure that the value of the assets exchanged remains the same for the sender and receiver. Plus, this network is a not-for-profit organization, so ownership – and control – is in the hands of those who hold the coins.
So look what happens when the wallet is eliminated from the digital coin transaction. For coin users, knowing that the $500 you hold today will be worth $500 tomorrow and won’t be hacked will be a driving factor in the widespread adoption of cryptocurrencies. Only when coins are truly stable and transactions are conducted P2P will crypto live up to its promise as the first truly decentralized currency and make the world a better place for all.