Backed Stablecoin Against VolatilityDavid Kemp
This idea was shared by Ido Sadeh Man, Founder and Chairman of Saga. He believes that a global economy needs a stablecoin backed by a currencies basket for protection from exposure risks to currency volatility.
He added that Saga is not meant to take place of existing monetary systems, rather implement within the one already existing. The SGA is meant to serve as a value storage. The coin is designed for slow growth and is not meant to blow up and double or triple its price overnight as Bitcoin.
The middle ground between fiat currencies and crypto
The pandemic, enormous drop in oil price, and a myriad of other problems undermine the global financial market and make it even more vulnerable to price fluctuations. The SGA Chairman believes that his project is designed to be more trustworthy for global regulators. The financial institutions see cryptocurrency as a red flag for the most part and a danger for world stability. Officials state that worldwide implementation of crypto may lead to loss of trust and confidence in fiat. U.S. Federal Reserve shares the same view.
However, it is clear that the way financial institutions are handling the situation today may lead the global market to hyperinflantation. Central banks are issuing more money to cover up the shortage of funds which may lead us all to a pessimistic scenario.
The Saga founder believes that it can be seen as a middle ground since it is backed by a basket of fiat (euro, yuan, yen, dollars, British pound). It will be based on bank deposits made in the aforementioned currencies represented in the IMF SDR.
The SGA Chairman explained why they have chosen this method by stating that the SDR is not easily responsive towards changes in a currency price.
Libra vs Saga
Of course, the stablecoin did not avoid comparisons with Libra that caused a great stir. Lately, Libra has been widely criticized as a potential threat to the existing global financial system. In the case of its wide-spread adoption, the central banks all around the world will be at risk. Man wants to heavily emphasize that unlike Facebook cryptocurrency, Saga will act only as an issuer and not as a profit receiver.
BTC is the source of inspo
The creation of digital gold, BTC was deeply rooted in the global economic crisis of 2008. The people were dissatisfied with how the central banks and other financial authorities handled the emerging danger of unstable fiat and hyperinflation. It was clear that something new is needed to preserve the value of a currency and stabilize the situation.
Ido Sadeh Man said that his project was one of many who found the inspiration in Bitcoin. However, he notes that his creation is meant to serve as a sensible ground between Bitcoin and a stablecoin.
When it comes to issuing coins, they adopted the same principle. It is not possible to issue the SGA on a whim. It protects Saga from being a speculation tool. It is meant to help with problems that real-life people face every day. Such as sending money to your family in another country and worrying that between yen and USD the funds will lose its significant portion because of price fluctuation. The World Bank stated that such money transfers from workers to their families in their home country add up to more than $600 million a year. Around six-seven percent of these funds are allocated for extremely high fees for conversion and sending money to another country. These workers are constantly at risk because of inflation.
Saga will provide a safe and stable way of storing value because it is backed by the most important world fiat currencies.
Central Bank Digital Currency criticism
The Saga Chairman also doubled down on emerging bank digital currencies. He does not believe that they can serve as a value storage.
Using a CBDC is not the same as using a decentralized cryptocurrency. You potentially providing a central bank with your information and deny yourself high level of privacy.
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