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On June 12, the Honestnode team announced the release of a new stablecoin project built on top of the Bitcoin Cash network called Honestcoin (USDH). The new token was made using the Simple Ledger Protocol (SLP) and recently launched on the cryptocurrency trading platform Coinex. This week news.Bitcoin.com spoke with the founder of Honestnode, Jian Shi, to learn more about this new stablecoin.
A Discussion With the Founder of Honestnode
Over the last few years, stablecoins have become a popular vehicle within the cryptocurrency landscape and since the birth of tether (USDT), there’s been a decent number of launched stablecoins on networks like Omni Layer, Ethereum, and Tron. These stablecoins have been collateralized in different ways.
Now the Bitcoin Cash network has a stablecoin called honestcoin (USDH) which was created using the SLP platform by the Honestnode team. USDH is a regulated stablecoin backed 1:1 for U.S. dollars and the Honestnode team aims to build various forms of infrastructure to support the token’s use cases. News.Bitcoin.com spoke with Honestnode founder and CEO, Jian Shi, who discussed how the company plans to bolster the potential of cryptocurrencies and blockchain solutions.
News.Bitcoin.com (BC): Can you tell our readers a little about Honestnode?
Jian Shi: Honestnode has created a regulated and secure stablecoin called honestcoin (USDH), and is building a diverse set of value-added application scenarios and tools to support its end-users. This will provide the Honestnode users with a stablecoin that is truly valuable in both the cryptocurrency world and the real world. Honestnode’s ecosystem consists of six primary products：
- Honestcoin (USDH): A regulated stablecoin backed by the U.S. dollar.
- Honestpay: The USDH version of Alipay.
- HonestOTC: An over-the-counter trading platform for USDH and other leading currencies including fiat currency.
- Honest Financial: A financial service platform that is a fiduciary receiver for USDH.
- Honestcard: A physical bank card that backs up the USDH accounts of users.
- HonestAPI: Allowing third-party applications to easily implement the USDH collection.
Our mission is to unleash the true global power of currency. Honestcoin is a secure, efficient and low-cost way to transfer assets around the world. With Honestcoin, users break through external constraints, remove unnecessary restrictions, and bypass costly intermediaries to maintain total control over their global assets. Honestcoin helps bolster the freedom of money.
BC: What made you decide to use the Bitcoin Cash (BCH) network to create a stablecoin?
Jian Shi: As the first regulated stablecoin on the BCH chain, USDH can fill a gap in the BCH ecosystem that lacks a regulated stablecoin. At the same time, Bitcoin Cash supports large blocks, with low transfer fees (about 1 satoshi) and 0 confirmation (instant arrival of small amounts). From the perspective of both transfer fees and speeds, it is superior to the BTC Omni Layer protocol and the ERC20 protocol built on Ethereum.
BC: Can you tell our readers how the USDH stablecoin is backed by your U.S. partner?
Jian Shi: Honestnode works with Koi Compliance, a San Francisco-based provider backed by Binance Labs, to ensure that USDH complies with all applicable legal requirements, including U.S. federal and state money transmission laws and AML/CFT rules. Among other things, USDH follows all requirements of a FinCEN-registered MSB by performing thorough identification verification, due diligence, beneficiary ownership checks, sanctions screening, transaction monitoring, and regulatory reporting. Additionally, Honestnode works with Cohen LLP to issue audited assertions from time to time to ensure that USDH is backed by USD 1:1.
USDH’s custody system is identical to that of TrueUSD. Specifically, all USD amounts used to purchase USDH are placed into a custody account controlled by Prime Trust LLC, a Nevada-chartered trust company. USDH’s operational staff and management members have no legal claim to such USD collateralization amount.
BC: Were there any regulatory hurdles you had to deal with before launching the Honestcoin (USDH) project?
Jian Shi: There were no regulatory hurdles. The USDH team proactively researched the regulatory framework for fiat-backed stablecoins and related compliance matters and decided to work with established providers such as Prime Trust LLC and Koi Compliance. The launch, therefore, was a smooth process.
BC: Will Honestnode continue dealing with regulators going forward?
Jian Shi: Yes. Honestnode will, for USDH, comply with all applicable legal requirements on an on-going basis. We will, therefore, continue to work with regulators in fulfillment of certain of these obligations (e.g. regulatory reporting and asset blocking).
BC: USDH recently launched on the exchange Coinex. Do you plan to launch on any other exchanges in the future?
Jian Shi: We will gradually enter listings on more mainstream cryptocurrency exchanges in the future. Honestnode is currently focused on building USDH applications in the real world, to solve high-cost payment and remittance issues, and gaining more non- cryptocurrency focused audiences.
After we have accumulated a comfortable number of users in the payment and remittance scenarios, we will expand the USDH’s presence in the cryptocurrency secondary market trading and enter more digital currency exchanges.
BC: You worked with the SLP developers when creating USDH. Can you tell us about this experience?
Jian Shi: It was an unforgettable experience, and we went through the gradual improvement of the Simple Ledger Protocol (SLP). While the process was challenging and arduous, SLP continued to improve and support us until USDH was released.
There is no doubt that this is a great team and we benefited a lot from their cooperation. At the same time, the development group of SLP is very enthusiastic and helpful. They always welcome new developers and are willing to share various problems encountered in the development process.
BC: Do you think a stablecoin created using Bitcoin Cash is beneficial to BCH?
Jian Shi: As the first stablecoin on BCH, USDH can fill the gap in the BCH ecosystem. We will broaden USDH in the payment and remittance scenarios, which will help increase BCH’s activity. In addition, with the development of SLP and other protocols, there should be more and more applications based on the BCH chain, and USDH can provide access to payment implementation for these applications.
BC: There are a lot of stablecoins now. Do you think it’s good to have a variety?
Jian Shi: From an early age, we learned that Emperor Qin Shi Huang’s unification of the six Chinese nations would be very beneficial at the time, while on the other hand, the super-globalization of the Euro of today reveals many problems and intricacies. So, whether monetary diversity is good or bad cannot merely be decided so quickly. The financial system is highly related to the national policy, the fiscal and tax system, and the economic system.
As Honestnode, we need to stay humble in the face of such an objectively complicated existence and system, to strive to create application scenarios while maintaining the regulation, stability, and efficiency standards. Under the same compliance framework, we are open to other stable currencies and welcome other teams to work with us to resolve the issue of currency segregation.
BC: Do you think USDH is a competitor to other stablecoins like tether (USDT) and Gemini dollar (GUSD)?
At present, the main application scenario of tether is digital currency trade, but the under-regulation of Tether is an existing risk of significance. Whereas, the Gemini dollar is backed by the Gemini exchange, which trades mainly in digital currencies. The USDH is initially positioned to be applied in the real world to solve the problems of high cost and the hindered path in the process of payment and remittance. Because the target market is different from tether and Gemini dollar, there will be no direct competition in the initial stage.
What do you think about the Honestcoin project and the stablecoin USDH? Let us know what you think about this subject in the comments section below.
Image credits: Shutterstock, Honestnode, Simpleledger.info, Honestcoin, and Pixabay.
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