Trustless quasi fiatcoins

We previously published The case for grassroot trusted fiatcoins as basis for quasi trustless fiatcoins. Some recent interaction pointed towards the relevance of completely trustless fiatcoins.

Fiatcoins in principle require some level of trust - in banks or in friends - or in some type of fiatcoin issuer. The note on grassroot trusted fiatcoins implies that a network of many trusted channels results in implicit quasi trustless fiatcoins - albeit still based on trust at the edges.

Here, we consider two possible roads to real trustless fiatcoins: synthetic trustless fiatcoins and trustless quasi fiatcoins.

Derivatives backed fiatcoins

A few projects are working towards fiatcoins over the lightning network (LN) backed by derivatives, including Galoy and Kollider - also Danny Diekroeger is working on tao wallet , which Steven Ellis has turned into a web app.

These projects depend on the availability of buyers / sellers of the derivatives that are required to support the stability.

Quasi fiatcoins

[update 31/10/2022 - it turns out reality has completely overtaken the below consideration: the Galoy solution referred above is now available for USD in the Bitcoin Beach Wallet and works really seamlessly, based on Stablesats - no need to look for further alternatives - the brand should have been fiatsats rather than Stablesats, but that is a detail. The only thing developers should pursue is reducing counterparty risk - this can easily be achieved by diversifying the # of counterparties - all exchanges could / should offer perpetual swaps (as they sell BTC for USD or other fiat]