Last week on Thursday IOTA (MIOTA) made the eagerly awaited announcement on a new technology that will change how business is carried out on smart contracts. Qubic technology was hailed by CFB, Come-from-Beyond, head of the IOTA Ecosystem, as a world changing technology. The announcement was made through a short clip showing the multivariate used it will offer IOTA as it aims to regain the $5 mark achieved earlier in January. The project preview left many with a taste of what is to come from the internet of things blockchain
This is not the first time IOTA has shocked investors and other stakeholders of its potential as the cryptocurrency has already been integrated as a real world payment system.
Are we close to seeing a fiat trading on IOTA?
Qubic offers an oracle that connects IOTA USD/EUR conversions with the rates obtained from Bloomberg.com on a smart contract. This is a unique feature seen in the blockchain industry that can allow the writing of forwards and options on cryptocurrencies which can lead to greater stability in price. The technology may not seem a big deal at the moment, but imagine a scenario whereby you could hedge your extremely volatile cryptocurrencies? This would lead to increase in adoption of the token massively as merchants and other real life users would be ready to accept crypto.
IOTA (MIOTA) trading platforms aim to benefit the most from Qubic’s development. Trading platforms on IOTA will have decentralized margin trading in a trustless and low transaction fees on its tangle. The platform allows writing of smart contracts on the system where you can readily exchange your IOTA to either EUR or USD any-time.
How does this work.
In a fully functional and liquid market (for ease of understanding), margin trades will be carried out seamlessly using IOTA stored as margin balances. On the smart contract system, Qubic will allow contracts to be written between IOTA and other fiat currencies so as to allow a stable currency on the platforms margin balances.
Imagine you bought 10 Mi (MIOTAs) in your trading wallets each trading at a rate of $2.50 at the moment. That is $12.50 total investment, but given the volatile nature of cryptocurrencies, the price drops to $1 per token the following day. This will feel like a lost investment if you would like to withdraw your funds tomorrow. To prevent this the system allows forwards to be written to keep the price of IOTA stable. In our case, you can find a willing person who would accept to buy your 10Mi tokens tomorrow at $12.5 even if the price drops to $1. To withdraw or trade using the IOTA in your wallet, the simple conversion will be made and it will be credited to your account. If the price drops to $1, 12.5 IOTA tokens will be credited to your account, 10 IOTA that you own + 2.5 IOTA from the other person balancing out your investment.
The problem with this lies in lack of enough depth in the market forcing the traders to lack contract sellers and buyers. However, with this being the first technology to allow decentralized stability in the financial industry and vast attention being placed on Qubic, IOTA (MIOTA) seems to have found its place in real world application.