Scientists design a stablecoin backed by electricity

Scientists Maxwell Murialdo and Jonathan L. Belof, from the Lawrence Livermore National Laboratory in California, confirmed the design of a stablecoin that they have called Electricity Stablecoin (E-Stablecoin) and that would transmit energy as a form of information.

The researchers decided to combine “statistical mechanics and information theory” to create this new virtual currency. The innovation will facilitate the transmission of “electricity without physical cables or network.

The value of the stablecoin, linked to a physical asset such as electricity, will depend entirely on the utility granted to it and will be minted “through the contribution of a kilowatt-hour of electricity, plus a commission.

Electricity Stablecoin could be used in transactions just like the other stablecoins in the crypto market or “the energy could be extracted by burning it, also in exchange for a fee.”

Smart contracts control the process

It is the first time a “hard-pegged” stablecoin, which can be traded “directly for a specific amount of a physical asset”. In the opinion of the researchers, electricity has both a fairly stable price and demand in the markets.

Furthermore, the electricity that would be used to mint the currency would be sustainable. “Investors could mint E-Stablecoin in regions where electricity prices are low, and burn the tokens where electricity is more expensive.”

With E-Stablecoin no “trusted centralized authority is required to hold or disburse the asset” because the entire process is designed to be controlled via smart contracts, with a decentralized data storage cloud.

Researchers Murialdo and Belof described their creation “as a proof of concept” and admit that further advances are required for an E-Stablecoin that works with greater “speed, transfer entropy and scalability of information engines”.

Additionally, they admit the need to optimize cloud storage or look for an alternative, however, their research has impact and theoretical implications, especially for the value that cryptocurrencies obtain.

M. Rodríguez

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Source: es.cointelegraph.com