Reserve Protocol Community AMA #10
By: Reserve Protocol Community
Tags: Blockchain, Venezuela, Reserve Protocol, Cryptocurrency, Crypto

Introduction and update

Nevin Freeman (CEO of Reserve Protocol)

The first thing I want to talk about is our process of opening up the App. As everyone knows this is the main thing that we’re focused on as a project right now.

I want to just talk a little bit about how that’s going and what’s going to happen after March. The way that we’re opening up access to our App in Venezuela, Argentina, Colombia and Panama is that for the first two weeks of March — so starting at the beginning of this week and going until the end of next week — we are adding everybody who’s joined the waitlist over the past several months. So we’re adding quite a lot of people every day and getting them set up to teach new users how to use the App. Two weeks was the fastest we could do that. When somebody joins the App they don’t know how to use it yet and it’s a little bit different from a normal financial app.

People typically have questions and so we need to be prepared to answer those questions when new people join the App. Because of that reason we wanted to limit the rate of people joining off of the waitlist during this period. So two weeks of adding people from the waitlist and then the next two weeks people can directly join without getting on the waitlist at all.

If you’re from a different country unfortunately you’ll still get put on the waitlist because we don’t have service in other places yet. But if you’re in one of our countries of access, then during the second two weeks of March you can just join and directly create an account and start using the App.

Then there’s a question of what happens starting in April. So in April we are going to leave the App fully open for people to continue joining. The reason is because we have to have some way to control the rate of growth in case it gets out of control — in case it is faster than our staff can handle and faster than we can grow our operation. It’s really important that as new people continue to encounter Reserve and try it out that they have a good initial experience and that our overall service for all of the existing users doesn’t degrade.

In April, we’re going to allow people who have Reserve accounts. We’re going to issue them invites so that they can invite other people that they’re friends or family with, or even people that they meet on the Internet. If they want to hand their invites out publicly that’s okay too.

It means that you have to find someone who has an invite in order to join and we can then change the rate that we issue new invites to people so it could be that on one week everybody gets five new invites that they can send out to people. But if the growth is going too quickly then we can slow it down a little and we’re only going to give people a couple invites a week. Or maybe there’d be a week where we don’t give out any invites.

Behind the scenes of all of this there’s a lot of customer support happening. We have recently announced we’ve hired a bunch of new team members. Our team is up to 57 team members now which is pretty exciting. The biggest thing that those customer support team members have to handle are spikes in activity when a lot of new people join the App like I explained.

If you’re a new user you tend to have a lot more questions and so we’ve tried to put together a team where we can actually handle every single minute of every single day. We’ve been putting a bunch of work into automating a bunch of the fiat transactions that happen behind the scenes when somebody is cashing in or cashing out with Venezuelan Bolivars or Argentinian pesos or any other currency including other cryptocurrencies.

A future piece that we are getting closer to working on something that we’ve spent time planning and architecting but we’re not yet currently writing the code is the next level upgrade to the exchange mechanism that works in the background of the Reserve App. Today we have a bunch of payment processors that are connected to the App. The system for routing transactions from customers to payment processors is pretty simple and we have a whole architecture plan for how to make that more nuanced and how to automate that a lot more so we can handle increasing volumes of transactions. We’re excited to begin building that soon.

The next thing to me to touch on briefly is that we’ve been focused on hiring engineers. As you’ve seen we’ve been posting publicly about the fact that engineering recruiting is a really big deal for us. I wanted to share that we’ve hired two engineers who I’m really excited about. We put a lot of work and care into finding great ones who are really good cultural fits for our team and who really get what we’re doing.

Both of the ones we’ve hired so far are from Argentina but we’re speaking to engineers from all over the world. I’ve been spending a lot of my time personally speaking with software engineers and managing that process in order to make sure that we get the best ones we can get. We have a growing pipeline and we’ll continue to hire more. We’ve been putting a lot of effort as a team into recruiting to build our recruiting pipeline.

We have set aside have $102,400 set aside for referral rewards for this round of hiring.

We have like a whole update to our website that we’re working on that will come out sometime in the next few months when we have the time to improve the public’s understanding of what we’re doing.

As we’ve mentioned several times we are shifting to focus on growth. For the whole past year we are trying to stay as small as possible. Trying to be nimble, trying to learn and update our understanding of of our market and tweak our product. And we’ve gotten to the point where we’re very happy with the product and we’re excited to try to scale that operation and serve as many people as possible.

I have two more things to add. One is that there will be some upcoming RSR token movements so as you guys probably all know from our blog post over a month ago we unlocked some RSR tokens from the slow wallet which is the smart contract where there’s a four week cryptographic delay. If we want to withdraw any tokens from that we have to make an announcement and wait 4 weeks. So if anybody doesn’t like the fact that we’re going to release tokens they have ample time to exit their RSR position if they if they feel inclined to do so. Those tokens are unlocked now. Hopefully anyone who was concerned with that has had time to exit and I think that this information is fairly priced in at this point. We haven’t moved any of those tokens and I just wanted to mention that sometime in the next week we’re going to get around to moving them. It’s going to be a very large transaction and you know that those tend to sometimes cause alarm bells. I wanted everyone to know and have a heads up that that’s going to happen, and if people on Twitter talk about it or they’re worried about it I ask you guys to help me and help the project in pointing people to the blog post to try to explain the purpose for those tokens and the reason why we’re doing that. A common question might be is the team dumping are all these tokens. It’s a lot of tokens and I need you guys to help me explain to people who know less about the project that you the purpose of this is to slowly accumulate a marketing war chest. And we’ve been pretty clear in disclosing exactly how we’re thinking about that in the following blog post.

The plan isn’t to sell all these tokens right away by any means. The point of moving these tokens to exchange accounts is to be prepared throughout the course of this entire year and even next year for a case where the market continues to heat up even more.

A way that you could explain it to people is that you know if RSR hits one dollar by the end of this year as many of you guys have predicted — it would be a big strategic mistake if the project hadn’t positioned itself to be able to sell some RSR and create that marketing war chest. You can think of it as preparing for cases where the market heats up even more to be able to strategically take advantage of that for the project.

I think that can be a really healthy thing for the long term of the project even though it does include us selling some tokens.

The last thing I want to mention is that I want to comment on a blog post that we released a few minutes ago. The blog post isn’t really an announcement but it does kind of contain an interesting announcement of some information that we haven’t mentioned publicly before.

The post discusses how we are looking for highly dedicated people from all of the countries that we want to serve where it’s really essential to the project initially one key person, and then to be able to build out a team of people from each country who really get it. Who really understand the monetary situation in that country. Who understand the nature of crypto and crypto regulation in that country. Who are really well networked with people in the industry. Who you can help us achieve what we want to achieve.

This is something that we’ve done in Venezuela. We’ve been fantastically successful with our team building in Venezuela and that’s something that we don’t talk about very often out of caution. We usually don’t mention our Venezuelan team members but we decided to go ahead and talk about that a little bit to make the point of how important it is for us to find the right people to build out these teams in each respective country. We wanted to talk about you one particular person who we decided to bring on who’s been instrumental in building that team.

That person is named Gabriel Jimenez. Over the course of the past year many of you guys have sent me personally Gabriel’s article in the New York Times because Gabriel was involved in some interesting high-profile projects in Venezuela.

Many of you have sent me this article and a corresponding video documentary that’s been made about him to say we should really talk to this guy. We were not saying that for the whole past year is he’s actually been part of the core team.

Gabriel and also everybody else who’s on the Venezuelan team (many of whom he helped recruit) have been really really key to us being able to achieve what we’ve what we’ve gotten to so far.

It would be very hard for us sitting in Silicon Valley not understanding the Venezuelan context to produce an app that really made sense to people in Venezuela. Three quarters of our team are in Latin America and the majority of those are in Venezuela. That’s been really important for us getting to where we are today.

I’m even gonna just talk about the story of meeting Gabriel and bringing him on. And I’ll try to give some context for why we haven’t mentioned before that he’s a part of the team. So I met Gabriel (and this is described a little bit in the blog post) because I was invited to speak at SF Blockchain Week back in 2019. I was asked to talk about our efforts in Venezuela which we were just getting started on at the time, and Gabriel was the the speaker right before me in line. He was there to talk about the Petro, which is the state-backed cryptocurrency issued in Venezuela. It turned out that he was somewhat involved in the Petro project and so many people were very skeptical of Gabriel because in Venezuela there is a general assumption that if you work with the government you are a corrupt person. And so there was there was resistance to the idea that Gabriel was actually interested in improving the lives of Venezuelans and actually interested in creating economic freedom for people in Venezuela.

But I decided that if he really was for real, if he really actually did care about those things that he could be a really key part of our project. So I actually took an interesting leap of faith and spent a few hours getting to know him. And I invited him to actually come move into my apartment because he didn’t live in the Bay Area at the time. And and I wanted him to get to know us, I wanted us to get to know him and because he was a sort of politically charged figure we couldn’t just immediately invite him onto the team. In fact, several people on the team including myself were pretty cautious. We were pretty concerned about should we get involved with someone who has this sort sort of history this, connection with the Venezuelan government. So we actually spent months living together. I was carefully getting to know Gabriel, sort of evaluating him. I ran some background checks and then he was doing the same thing with us. Trying to figure out if we were really serious about this. If we were actually going to follow through with our plans in Venezuela. He went and spent some time speaking to people at the Libra project and Cello, and perhaps others to try to evaluate who was going to be most serious about making this happen. Ultimately, he was convinced that it was us and we were convinced that he was actually an excellent potential team member. We decided to bring him on to the team full time in 2020, and since then he’s been helping out in in a really impressive way.

I’m super happy about our decision and I think he is too. We’ve been a little bit cautious about talking about it because we just didn’t want to make waves too early in the Venezuelan community. Some people have a negative perception because of the fact that he touched the Petro project, but if you read the article I think you’ll see why we think that that’s not an issue. Especially now that we’ve reached a point where the project really can sort of stand on its own people, can evaluate the product and the service in their own right, we felt that it was no longer necessary to keep that information private.

I wanted to give an example of what it is that I mean when I say that we need to find people who are really hardcore, who really are dedicated to doing this kind of thing in their country. Gabriel is a great example of that, and other people that we’ve been able to bring on in Venezuela.

We want to replicate that same kind of process with people across all the different countries that we’re excited to go into.

Community Questions

We’re going to go ahead and open it up to questions.

Community Question #1

When will you open up the Reserve App globally?

Nevin Freeman (CEO of Reserve)

Our intention is for the App to be open worldwide eventually. We kind have to take an active approach at least at the beginning of the project when we’re opening in each new place. Some people are probably familiar with this metaphor we compare it to — the process of rolling out Uber or Lyft. You want to sort of start by figuring out the formula figuring out the logistical setup and then once you get that ironed out, then you can start to replicate that in more and more places with the eventual goal is to have the App be completely open to everybody in the world, and to support a huge number of currencies, and a huge number of payment methods for each currency all across the world. Goal is to be able to move your money in from almost anything and move it out to almost anything else. I’m going to take the opportunity to mention something cool that I’m excited about, which is that the way our service works.

We actually allow you to make payments in payment methods that are connected to Reserve even if you don’t have that payment method yourself. For example, let’s say let’s say I want to make a payment to somebody in Venezuela, and let’s say they’re not even a Reserve user yet, and they just have a Venezuelan Bolivar bank account. I can actually with my Reserve App make a transaction that lands in their Venezuelan Bolivar bank account so it empowers me to make Venezuelan Bolivar payments or Argentinian Peso payments even if I don’t have those accounts. If you’re someone from the US, it’s actually really hard to get a bank account in other countries like that and so this enables you to make payments elsewhere in the payment system that you couldn’t ordinarily get access. No matter which country you’re from you can make payments to pretty much anyone even if they’re not a Reserve user yet because you can sort of trigger those payments with those other payment methods. That’s something that we’re super excited about, seeing what the network effects and the impact of that will look like as we grow that out to multiple different countries.

Community Question #2

What kind of potential fundamental risk there might be to the project if the governments of your target markets suddenly going to decide to ban the App in order to protect their exclusivity towards their own monetary system?

Nevin Freeman (CEO of Reserve)

The answer is actually more nuanced than I had anticipated going into the project. I’ll try to shine some light on that nuance.

On a high level it’s definitely something we consider. It’s definitely something that we do think could happen. You should assume this is a real possibility, and I’m definitely not here to say that that’s not going to happen.

However, we are building out the system in such a way where it is meant to be able to continue operating even if the local authorities aren’t necessarily happy about it. We’re building a decentralized fiat on an off-ramp system that’s meant to be able to function under those conditions where local authorities aren’t necessarily happy about it.

It may not be that likely for there to be any sort of sustained banning and here is why. One pattern that we’ve noticed is that when a country gets pretty far along in the process of hyperinflation, the government can actually decide that it’s not necessarily a bad thing to allow its citizens to use stable foreign currencies. We have seen this in Venezuela where it is currently tolerated to make transactions in cash US Dollars. In fact, in many cities well over half of transactions are happening in cash US Dollars.

A while back that’s something that was unheard of in Venezuela. People were a little bit afraid to reveal that they were holding cash US Dollars and there weren’t a whole lot of transactions happening in public.

We actually got to a point where the leader of Venezuela actually publicly said something like “thank god for the dollarization” showing his appreciation for the fact that foreign currencies coming in and being used actually helps stabilize the economy and help protect the functioning of the country.

What I’m trying to say there is there are times when governments that are involved in hyperinflationary scenarios can actually choose to welcome external solutions that are different from their own monetary system.

But that’s certainly not always the case. If we look at Argentina today, you are limited to not being able to purchase more than something like 200 US Dollars per month. You might think about that and say okay well maybe that’s because they’re not really off the deep end so the government is still sort of grappling, trying to maintain control. There’s one more nuance point to mention there. The Argentinian Central bank has a bunch of US Dollars and those capital controls that are in place are one of the principal reasons for those controls so that the central bank doesn’t have to spend too many of those of its own US Dollars basically processing those currency conversions on behalf of citizens. They have control of the dollar budget and can use those dollars more targeted ways. They can basically give preferential access to businesses who are import businesses that import important goods and services to the country. If you start to think about it from the country’s perspective, making sure that you have plenty of US Dollars to be able to deal in foreign markets and making sure that your businesses that are importing the most important goods and services use those dollars — that makes sense. There’s actually logic to that. There are lots of practices in Argentina where people buy and sell cash US Dollars that are actually tolerated. In some cases they’re legal in, some cases they’re not officially legal — but in all cases they’re actually tolerated. The government doesn’t work very hard to shut those down, and I personally think that’s because the thing they principally care about is the central bank’s dollar balance. This is all just to say that there’s a lot of factors that go into whether or not a product or service like this might be attacked by local governments. We think that in many cases the reason for an attack is actually some sort of political narrative battle where if we come out and say lots of negative things about some local government they might feel the need to strike back.

It is a gray area, and like I said it is a risk — but there are all those different factors that go into it and we spend time learning about those factors and trying to track them and understand.

Community Question #3

Over the last couple of days I’ve seen some posts from people in Turkey and Iran talking about how people in those countries are buying Bitcoin because of spiraling inflation. My question is how do you think Reserve would differentiate itself from other projects and why would

Nevin Freeman (CEO of Reserve)

We are working to offer a stable coin which is stable against the US Dollar. In the long term our plan is to offer something that’s stable irrespective of the US Dollar. That’s the simplest differentiator.

What we provide is very different. It’s more like a standard fintech type service where it doesn’t really feel like crypto to the end user.

Community Question #4

Are there any updates on the release of the mainnet?

Nevin Freeman (CEO of Reserve)

We definitely anticipate doing it this year, but we don’t have a specific timeline that we want to announce quite yet.

Community Question #4

People tend to compare RSR to LUNA and TERRA. They see TERRA stablecoin market cap is like 750 million dollars. Why is it TERRA doing much better than Reserve?

Nevin Freeman (CEO of Reserve)

You can look at TERRA as an example but even other stable coins like Tether and USDC — we’re talking billions in market cap.

We are with a tiny market cap in comparison. The basic difference between our project and those other projects generally speaking is that we made a conscious decision to not focus on serving crypto speculation and instead to focus on serving people in countries that have currency issues. We believe that this market is enormous, even bigger than crypto speculation. It’s also a market that’s much less developed, so instead of just plugging into existing infrastructure and serving a customer base that’s already really well developed. we’re building something new from scratch.

So when you build something new from scratch it takes a lot more time to get all the pieces figured out, to get you know customers onboarded, to educate the market about the existence of this new option. And so because of that, we are starting really small.

From our perspective we think that biggest need for cryptocurrency outside of speculation is this use case of giving access to people in places where normal monetary systems and normal fintech products actually can’t exist. We decided to go into that different direction and see if we could serve that market.

Community Question #4

How will arbitrage work? Will there be any limits on participating in arbitrage?

Nevin Freeman (CEO of Reserve)

The way to think about the arbitrage process is that it occurs at a moment where the value of the RSV token on on external crypto market is slightly divergent from the pegged value. Let’s say that RSV is pegged to the dollar just for the sake of simplicity. If it’s trading at say one dollar and one cent then what that means is that you’re able to purchase an RSV token for about one dollar from the protocol and then go sell it for one dollar and one cent on secondary markets. That way you earn that one cent of risk-free profit immediately. That’s that’s what arbitrage means — when you’re buying something and selling it basically at about the same time for different prices.

If you’re using RSR to participate in arbitrage you would be making a purchase of RSV and you’d be paying in RSR. Basically, you’re taking some RSR and you’re spending it in order to buy RSV from the protocol. Then you’re turning it around and selling the RSV on secondary markets. T

It will be an open auction so let’s say that RSV is trading for one dollar and one cent on secondary markets. If I’m willing to pay 97 cents worth of RSR to get an RSV token and you’re willing exactly one dollar then you would get to purchase all of the RSV that’s available if we’re the only two bidders.

If I were to up my bid to one dollar and 1.001c now Iwould be the one being able to purchase all the RSV. It’s an open market and so there isn’t a limitation um on how much you would be able to purchase. I don’t think that there’s a reason to have a limitation. It just comes down to who is willing to pay the best price.

Community Question #5

I’m just wondering if the mainnet will be before October?

Nevin Freeman (CEO of Reserve)

I don’t want to give any particular commitments unless unless I’m really sure we can hit them. We want to maintain a little bit of flexibility but what I will say is that I’m definitely aware of the different outcomes that could occur depending on when the main that launches.

Community Question #6

For the US people that want to purchase RSR, I know that they’re purchasing it through Uniswap or in other ways.

I was wondering if you have any plans in the near future of listing RSR on a US only exchange.

Nevin Freeman (CEO of Reserve)

I guess what I can say is you know is that Coinbase did publicly state that they were considering to list RSR. They obviously haven’t listed it so there’s that possibility that they would decide to do that at some point.

There are a number of other US exchanges who are possible contenders but you know that we really can’t comment on that in advance.

At some point in the future we anticipate that happening but we can’t really say anything about any particular plans.

Community Question #7

Is it safe to say as Coinbase are an investor that it would be in their interest to list?

Nevin Freeman (CEO of Reserve)

That would that be a good assumption.

The fact that they publicly announced that they were doing research into considering listing is fair to say is an indication that they’re interested in doing it.

Community Question #8

What is your relationship with the main investors, do you have any contact with them? Coinbase, Peter Thiel, Sam Altman,…

Nevin Freeman (CEO of Reserve)

I provide them some information about the project on a periodic basis. I would say most of the interaction isn’t formal. It’s just going back and forth when there’s something that we need or something that they want to know, or something that they’ve thought of and want to offer or connection they want to make.

Throughout the course of the year there’s hundreds of those kind of one-off interactions with our various different investors, and then something once a year, maybe twice a year I sit down and type out a more detailed update for them that contains a little bit of inside information about the project just highlights they might have missed.

As the project has shifted towards focusing on growth, we’ve had more interaction over the past couple of months with some of our key investors and advisors. For the last year we we didn’t really lean on them that much because we were really pretty narrowed in on our own product work, but now we’re getting to the point where we’re focusing on recruiting and thinking about business development more.

I’d say that the pace of interaction has been picking up with our seed investors going into 2021.

Community Question #9

Are you mainly focused on approaching consumers as opposed to governments in new countries?

Nevin Freeman (CEO of Reserve)

We focus on consumers and businesses, not governments. We don’t really we don’t have an issue dealing with governments but generally speaking our customers are businesses and consumers. The businesses range from very small to actually quite large.

In Venezuela we do have some customers who are pretty large businesses who are doing really significant amounts of volume. We have seen some pretty exciting early traction from large businesses.

Community Question #10

You talked about the challenge of scaling people onto the app and it sounds like your approach makes a lot of sense.

What do you and the team really need from us the community, how can we help?

Nevin Freeman (CEO of Reserve)

If an RSR holder is able to bring an essential member to the core team, if you can help us recruit somebody who really can really can get into the weeds and do some significant work for the project — that’s probably the biggest thing.

That’s part of why actually we decided to run the experiment with recursive recruiting where you can refer your friends who could refer their friends who could refer their friends… who could eventually refer the kind of person we’re looking for.

If you’re not in a position to refer somebody to the core team, some RSR holders are out there educating other people about the project all the time, especially on Twitter — and I super appreciate that.

There’s actually quite a lot of information that gets spread around and ideas about the project that get spread around just through tweets. Even memes do a fair amount of education about the project.

This community has grown a lot because of people deciding to spend their own time doing that education on the internet to bring other people into the project. So if you if you’re not in a position to recruit, then I think another great thing you can do is to help educate in that way.

Community Question #11

Can you expand on the relationship with PayPal?

Nevin Freeman (CEO of Reserve)

We are connected to people there who really do care about crypto and blockchain. You know PayPal has a department that is focused on crypto and those people are for real excited about it.

There’s really no getting around the regulatory and bureaucratic limitations of working with a large company and our conversation with them largely centers around compliance. We are basically waiting for internal processes to complete, and there’s still even some uncertainty about what decisions will be made.

Back when Libra was initially announced I reached out to Peter Thiel to say “hey you know do you know David Marcus, would you be up for making an introduction because we’re interested in talking to the team and seeing if we should maybe be working together with them”. Instead he had an interesting and surprising reply. He emailed me back and he said something to the effect of “yeah I know David and I could make an intro, but I think that big companies move really slow and I think a startup like Reserve shouldn’t be working with any big companies”.

If you think about it was over a year ago now, and Libra has moved really slow. Peter was actually right about that. I share that example to talk about how we’re very excited about working with PayPal and we’ll continue to work with them and we really think that we can make it happen and scale that channel — but they’re a big company and so they do have to move slow.

We need to make sure that our plans for success don’t depend on them. There’s an important augmentation that can happen and I think it will happen. I think it actually could be a pretty big deal, but even if it if it doesn’t happen for a while that’s okay.

Community Question #12

When are you planning to release some numbers on App usage?

Nevin Freeman (CEO of Reserve)

I’m not sure exactly when we’re going to do it but pretty soon. Basically we’re just waiting to see what happens with our growth metrics when we open up the App and what our volumes are looking like.

But I think we’re getting to the point where we might be ready pretty soon to make some pretty exciting announcements about those metrics.

It’s definitely getting to the point where I think we’re gonna be able to talk about some numbers and a lot of people in the crypto world are gonna kind of turn their head and be like whoa, how did that happen.

As far as timeline, in the next few months. I’m excited for us to to start being more public about that relatively soon.

Community Question #12

When you released your App retention rates I checked against other financial apps and also banking apps and you’re outperforming them by about 200 percent!

Nevin Freeman (CEO of Reserve)

Yeah I know, it’s pretty crazy. I think there is an 88% chance users are still using the App after 8 weeks.

We’re just talking about early adopters so that rate probably will go down as we start reaching people who are in the wider population — but still it’s a really exciting statistic and i think it really validates the fact that we have taken the time to figure out how to present this product to people who really really need it, and to present it in a way where it really is working well enough for them that they really want to keep using it.

That has been been our focus for the whole last year. We could have a way larger RSV market cap, we could have way more trading volume, we could have all this progress in crypto but we decided we’re gonna try to build this special product that people will really like.

So I’m excited for that statistic, I think that is a leading indicator that maybe we’ve actually succeeded in doing that.

Community Question #13

Ethereum gas fees have been very high and they vary a lot. Will that be prohibitive to decentralization and hosting RSV transactions on chain and would that in turn make mainnet decentralization kind of contingent upon the success of Ethereum 2.0?

Nevin Freeman (CEO of Reserve)

Sidechains and Layer 2 solutions are going to be the answer for us just as they are for everybody else who’s serving a consumer use case.

In our app you’ll be able to hold your own keys and transact on chain but you’ll be transacting on a sidechain. It won’t be a sidechain that we host, it won’t be centralized but it won’t be the Ethereum mainchain.

I think that that will totally handle the gas fee problem. And then if somebody wants to go take their RSV tokens and do something with them in the broader Ethereum DeFi ecosystem they’ll need to move them back onto the Ethereum chain and then we’ll have to contend with those gas fees.

But many of our consumer users and business users won’t have a need to do that.

Community Question #14

In the long term do you go off the dollar peg? I’m trying to imagine the sort of units that RSV will be compared to and fluctuating against that would trigger arbitrage?

Nevin Freeman (CEO of Reserve)

There’s different ways. One way is you choose a basket and that basket is taken to be the unit of currency. Let’s say we had a really simple basket that was one-third a particular type of a bond, one-third gold and one-third US government debt. You could imagine putting that basket together and then just saying that’s what the coin is worth 1/3 of each.

Then in the same way as if it’s pegged to the dollar in that case now it’s just pegged to that basket. Now you can also do something fancier where you could say it’s backed by that basket, but it’s not pegged to that basket. We want the value of the coin to be relative to some other asset. In that case you can use an oracle to gather whatever information about prices of assets in the world in order to to peg the coin. The natural thing to peg to in that case would be a fiat currency or a basket of fiat currencies.

People have proposed nuanced things where you actually try to gauge the purchasing power of the asset. You could actually gauge well you how many hamburgers or how many whatever can you purchase with this coin.

You could actually try to formulate a consumer price index similar to how the FED does with with the dollar and actually have the protocol work on that basis. It’s an interesting research direction.

We are laying the groundwork, we are building a framework for the future of how we think currency should work, but there will have to be decisions made over the course of time and our governance process will have to accommodate those decisions. We can’t look into the future and say exactly how it should work exactly — which asset should be in the basket and exactly how the pegs should function.

Community Question #14

Unlike many other crypto projects Reserve has an actual use case and that’s amazing, but more importantly Reserve is clearly looking to change people’s lives. In the crypto space most people are so focused on private profit that they forget what the whole point of decentralization is.

Assuming everything goes perfectly, what’s your final vision for Reserve?

Nevin Freeman (CEO of Reserve)

The core idea at the very beginning of the project was actually very simple. We actually started off with the question could we create something that works like Bitcoin, but actually functions as money.

Bitcoin has a volatile price. You could argue because of some other properties it has, it could be a gold replacement but it couldn’t really replace money.

The initial reason in my mind for why I thought it could be interesting to have something that worked like Bitcoin but functioned as money, is if you look at the long course of history every few hundred years the major dominant empire in the world falls apart and a new empire becomes dominant. And when that happens the world reserve currency ceases to be the reserve currency, and often falls quite a lot in value — is replaced by the currency for the next dominant empire.

I’ve always wondered could you have a single currency that isn’t attached to any one state and that is actually used as the world reserve currency — that maintains a stable purchasing power over the course of time even during those transitions from one empire to the next.

If everything goes perfectly and we actually achieve the eventual full vision that’s what it would be. RSV would actually be a cryptocurrency that is is backed by a super diverse basket of assets, that is able to maintain a stable purchasing power irrespective of the US Dollar or whatever else is the world reserve.

Maybe we would see the world actually switch away from depending on the fiat currency of the dominant empire and instead it could depend on this single cryptocurrency.

You could no longer have to contend with the crumbling of a currency every few hundred years. You you would also have something that’s more politically neutral and used as that world reserve currency.

We decided to focus on parts of the world where fiat currency is suffering the most in order to get a foothold for the project to start building out this whole platform for using the currency, and building out liquidity and building out the brand, and the community.

I think of this as something that would happen within the next three decades, and that’s not really like a well-reasoned number but to me it feels possible. Over the course of something like three decades we could actually bootstrap to the point of being possibly the number one cryptocurrency providing a stable alternative to fiat money.

It feels plausible to me that over the course of the next three decades all the the things that are just initial fears about the US Dollar could start to become more of a reality, and that’s really what it would take to prompt people to start to switch more significantly away from from the dollar and to start holding something else.

So if Reserve is a really a credible alternative and really is a true backup option then we could see that migration start to happen.

That’s the the long-term vision, and I think that’s probably a great way to end this conversation as well.