AlloyCoin is a new crypto-currency designed to work alongside a Reserve that guarantees value for each AlloyCoin. The Reserve will always buy-back AlloyCoins for a fair, pre-determined price. Hence, AlloyCoin will enable individuals to feel more secure about the value of their AlloyCoin. In addition, the Reserve provides a number of other services. Most importantly, the Reserve will distribute its value across a variety of currencies and assets. The total value of the Reserve is expected to grow over time, from both interest on assets and income from business services. As the Reserve value grows over time, the value of each AlloyCoin will slowly gain in value. AlloyCoin is a more financially safe crypto-currency which is valuable by design as opposed to purely by demand.
The decentralized nature of cryptocurrencies has obvious and distinct advantages, but also brings about problematic effects. Because of market speculation, the valuation for cryptocurrencies constantly fluctuates making the price of traditional cryptocurrencies a strict function of supply and demand. Flash market crashes, extreme inflation and deflation, and acute daily price swings (30% or more), are normal occurrences in cryptocurrency markets. Thus, mass adoption of traditional cryptocurrency, both as a primary method of payment and investable asset, is bounded. A substantial innovation must occur to break the current paradigm.
AlloyCoin ICO is the first hybrid-cryptocurrency designed to work alongside a Reserve that establishes a minimum value for each AlloyCoin by maintaining a supply of cryptocurrency assets (with plans to expand to index funds). If the market price drops below this minimum value, Alloy Reserve liquidates some of the assets it holds and offers to buy back AlloyCoins from its users at a fair price. In this way, Alloy Reserve prevents market prices from collapsing to 0 and enforces a price floor thereby giving AlloyCoin users a level of security no other cryptocurrency can offer. A cryptocurrency with a price floor is like having an insurance policy against volatility designed to protect investors from losses.
If AlloyCoins had a perfectly stable price, what incentive would investors have in buying AlloyCoins? In other words, how can security be introduced without limiting positive gains? To answer these questions, we must understand that AlloyCoins have two prices. Alloy Reserve sets a lower bound value for the price of AlloyCoins, while market demand determines an upper bound value. These prices are referred to as the base-price and the market price respectively. The market price grows when demand, interest and adoption of AlloyCoins grow. The base-price grows when Alloy Reserve’s pool of assets and investments earn interest. In this way, AlloyCoin can provide both growth and security by maintaining a healthy market price supported by the security of a baseprice. While other currencies are valued by speculation, AlloyCoin has value by design.