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New York State Approves Two Dollar-based Cryptocurrencies (engadget.com)
Today, New York approved the first digital currencies that are tied to the US dollar, called "stablecoins." From a report: These cryptocurrencies avoid the price volatility of their brethren by being pegged to stable assets. The digital currencies in question, from Gemini Trust Company and Paxos Trust Company, are available to trade on their respective exchanges. The Winklevoss twins, who rose to fame with a lawsuit suing Mark Zuckerberg for stealing the idea for Facebook from them, have become major players in the cryptocurrency world. They are behind Gemini Trust Company. The currency is pegged to the US dollar on a one-to-one basis; the company will hold US currency that corresponds with all issued Gemini dollars at a bank eligible for the FDIC's pass through insurance.
The key to bitcoin is that it solves the DOuble spend problem. Of course it's solution is very electrically expensive. But it's that expense that creates a prohibitive barrier to deter double spending. The consequence of that is that is either fees or inflation (by mining) is absolutely required for bitcoin to work in a distributed system.
You can avoid the extremely high fees that deter doubkle spending if you want to give up the distributed blessing system. In that case you just have a central clearing house that a"promises" no double spends because only it can control the ledger. It can then use it's monopoly instead of a cost barrier to insure each coin is spent once.
by giving up on mining then, the transactions can then become fee based and for a low fee.
But then that's the same a visa or mastercard or for that matter a personal check.
most people associate crytptocurrency with distributed ledgers. not central clearing houses.
It sounds like this is just exactly another clearing house with a ledger that is weakly harder to alter over time than a conventional ledger.
Some drink at the fountain of knowledge. Others just gargle.
How do the Winklevoses cover operating expenses?
Float.
You are giving them an interest free loan of $10k.
They can make money by investing it.