Can I establish a bank and issue a new Ripple coin myself?
This is a guest post by Stefanlau originally posted on Crypto LA.
As we all know, it’s easy for us to launch a new coin, and the cost is not very high. As demonstrated by Ripple coins like IOU, FLC and JED, we can all launch a new coin by using our ripple wallet addresses as a gateway.
If others are willing to trust your address, you can distribute and send your new coin to them. That’s how your coin will flow into the public market. For example, fans of Kobe Bryant can issue Kobecoin, and in their community they can exchange gifts like basketballs or autographed photos for their Kobecoins. Fans can deposit the funds into your account by trading Kobecoins for other coins. But what is interesting is that you may also transfer your Kobecoin into Jordancoin if you’ve suddenly decided you like Michael Jordan better. All of these exchanges are completed by the gateway.
Your USD is not my USD
If someone’s willing to trust you, you can exchange IOUs for USD or CNY. But is this USD like other USDs? Can you exchange them in another gateway? The answer is sometimes no. Because this USD is just a sign. This sign can only be exchanged in gateways. If nobody trusts you, your USD isn’t worth anything. So some newbies are frustrated that they can’t exchange their coins for USD. Because they deposited the USD into their ripple wallet via Bitstamp, but they want to buy XRP in the Snapswap gateway with “fake” USDs. Obviously, it’s not possible.
It’s key that newbies completely understand Ripple’s “trust” function. You must know your USD is not my USD if there is no trust. If you trust me with $1,000, I could borrow your $1,000.So use trust carefully!!
Some notes about trust:
- Only trust prominent gateways with strong reputations.
- Don’t trust someone you don’t recognize and don’t let others trust you easily
- If someone lets you trust him for USD or CNY outside of a gateway like Bitstamp or Ripplecn, that trust may be misplaced.