Altcoins Guides


What is Audius?

What is Internet Computer?

What is Elrond?

What is VeChain?

What is Ethereum Classic?

What is Avalanche?

What is Brave’s Basic Attention Token?

What is Flow – the developer-friendly blockchain?

What is Chainlink and why does it matter in the crypto world?

What is the DAI stablecoin?

What is THORChain?

What is Tron?

What is Axie Infinity?

What is the FTX Token?

What is Klaytn and how does it work?

What is NEAR Protocol?

What is Polygon?

What is a non-fungible token (NFT)?

 What is Kusama – a canary network for Polkadot experiments? 

What is Zilliqa?

What is OMG network?

What is Terra?

What is Algorand?

What is Graph Protocol?

What is HIVE blockchain?

An introduction to the IOTA protocol

Five XRP wallets you should consider using

What is NEO cryptocurrency?

Three reasons why blockchain games are on the rise

What is the USD coin?

TrueUSD: Can it be trusted?

What is Skycoin?

Tezos for beginners

Bitcoin vs. Altcoins: The differences you should know

An introduction to Tether

The beginner’s guide to stablecoins

What is Dash cryptocurrency?

What is Cardano?

A beginner’s guide to blockchain

What is Litecoin?

What is Stellar cryptocurrency?

A beginner’s guide on how to mine Ethereum

A beginner’s guide to mining new altcoins

What is EOS?

What is Ripple?

Bitcoin Cash (BCH) for beginners

Ethereum (ETH) for beginners

Cryptocurrency terms for beginners

What is cryptocurrency?

A brief history of Ethereum

What is cryptocurrency mining?

The use of blockchain technology in digital advertising

A guide to the Ripple product suite

The top five privacy cryptocurrencies

Stablecoins: what are the risks and benefits?

The best GPUs for cryptocurrency mining

What are the best strategies for mining cryptocurrency?

A beginner’s guide to data mining and cryptographic hash functions

Understanding tokenomics

How to mine for cryptocurrencies

Why does decentralisation of cryptocurrencies matter?

What is a Mining Pool?

What is Hash Rate?

What is a smart contract?

What is Proof of Work?

How network nodes are used in cryptocurrency

Four projects leading the way in database sharding

Explore other guides


TrueUSD: Can it be trusted?

Trust is extremely important in the crypto space. Here, we take a look at TrueUSD to see whether it can be trusted as a stablecoin

The issue of trust is well-documented in the crypto world. One aspect of crypto is to facilitate peer-to-peer transactions that are trustless.

This was part of Satoshi Nakamoto’s vision when Bitcoin was first conceptualised. The Bitcoin white paper reads, “what is needed is an electronic payment system based on cryptographic proof instead of trust.” But, many tokens cannot be fully trusted.

Another aspect of crypto was to create an alternate payment system. Yet, the crypto markets are incredibly volatile and so crypto cannot fully serve as this alternative method, at least not at this stage in time.

Stablecoins were devised to be pegged to fiat to reduce the impact of this price volatility. TrueUSD is pegged one to one with the US dollar.

Here, we take a look at the TrueUSD coin to see whether it can be trusted.

What is TrueUSD?

The TrueUSD coin is part of the TrustToken asset tokenisation platform. It is a blockchain-based stablecoin.

Some stablecoins are pegged to a certain token, such as Ether. However, TrueUSD is similar to Tether in the sense that it is backed by fiat currency.

Stablecoins pegged to fiat are traditionally safer than those pegged to another token. This is because having a stablecoin pegged to another token does not mitigate against volatility. For example, if the price of Ether suddenly dropped, so would the stablecoin pegged to it.

This doesn’t mean that a stablecoin pegged to fiat is 100% safe, but it is less likely to experience the levels of volatility that other cryptocurrencies succumb to.

TrueUSD is an ERC-20 token. ERC-20 tokens are designed to be solely used on an Ethereum blockchain.

How is TrueUSD backed?

The system TrueUSD has in place functions by storing US dollars in the bank accounts of multiple trust companies rather than in a single bank account controlled by a single entity.

The trust companies who have custody over the US dollars must sign an escrow agreement. An independent third-party accountant will then verify the escrow agreement. This information is then published in a monthly attestation report.

How can you apply to acquire TrueUSD?

To apply online to acquire TrueUSD, you must first complete Know-Your-Customer (KYC) and Anti-Money Laundering (AML) tests.

These two tests are necessary for compliance reasons. The KYC one is to ensure that a customer does not have the intention of committing illegal actions. The AML test assesses a customer’s likelihood of laundering money. KYC and AML tests are commonplace in the financial world.

Once a user has completed the checks, they can send USD to one of TrueUSD’s trust companies. After the funds have been verified, the TrueUSD smart contract will execute and issue the tokens to the user.

A smart contract is a special contract that is written into the code of a blockchain. It can only be executed once all parties have upheld their side of the bargain. This is one method to ensure trust, at least on a peer-to-peer basis.

The tokens will be issued on a one-to-one basis and sent to customers’ Ethereum wallet addresses. Once the tokens are in a wallet, customers can transfer them or use them as payment.

Customers can also redeem their US dollars from TrueUSD. To do so, all they must do is return the TrueUSD tokens to the smart contract address. The trust company will then be notified and it can return the US dollar/s.

Once this happens, the TrueUSD users send back is ‘burnt.’ This process is necessary for ensuring that there is always a one-to-one ratio of TrueUSD to the US dollar.

Can it be trusted?

TrueUSD is partnered with Cohen & Company, a reputable auditor. It publishes attestations to verify that TrueUSD holds the amount of US dollars in the escrow service it claims to.

Cohen & Company’s report on January 2nd 2019 revealed that the number of TrueUSD tokens issued and in circulation clocks in at 206,371,311.

The TrueUSD blockchain, at the time of writing, displays the total supply as 206,986,214.94.

Cohen & Company’s report also highlights that TrueUSD is using the services of Prime Trust, LLC and Alliance Trust Company of Nevada as its escrow agents.

The Cohen & Company report states that the escrow management is compliant with the relevant regulations. However, it also states it did not perform any procedures relating to the operating effectiveness of TrueCoin LLC’s internal controls.

For the most part, TrueUSD is legitimate. At least according to Cohen & Company.

However, as with all projects and companies, we do not recommend any one in particular. Treat TrueUSD as you would any other cryptocurrency: with scepticism.

To learn more about recent events and topics, check out Coin Rivet’s latest news articles and guides.


Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.