Limitations on Cryptocurrency Pegs

by coinewzealand

It is tempting to believe that a peg between a digital currency and fiat one can be set arbitrary. At the same time, the novel nature of the Kiwicoin project means there is a substantial lack of relevant real world data. While similar projects like Peercoin and Gold Backed Coin can offer antecedents, we are traveling in uncharted territory.

Since the Kiwicoin is intended for New Zealand, many of the cryptocurrency exchanges here are registered as Financial Service Providers, and have limits on how much they can deposit per month. Our initial peg was devised after reviewing these limits, but also with other considerations: to allow for divisibility of our currency, to make a meaningful impact financially, to allow for extra space on both sides of the decimal point, and so on. We also have reserves that we will maintain in case of operational issues.

A peg, in the long term, many not necessarily be required, but at we are going to be deploying it as long as we can for the foreseeable future. Likewise, other countries and regions can learn from our implementation, and to adjust accordingly. We would advise any would be collaborators to mind things like their own country’s financial laws (especially among individual states in the EU and US), the existing cryptocurrency market, potential for misuse, and ways the system could fail. To understand a thing is to know how it can be destroyed, as well as how to repair it.