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What is DAI and why is this cryptocurrency presented as an alternative to obtain dollars?

Devaluation of the Argentine peso, restrictions and prohibitions to buy dollars, excessive tax pressure, legal uncertainty. All of this has become a bitter taste salad that has affected Argentine citizens. And also, we should add the context of pandemic and quarantine.

But, in that scenario, the stable currency Dai appeared as an interesting alternative for savers or investors. It is a cryptocurrency with verifiable backups online, which has become one of the safest options for safeguarding capital.

In order to acquire Dai, the first thing you need is a Ethereum purse or wallet. There are several and they are free. They can be downloaded to a mobile device such as a cell phone.

To buy, it can be done through brokers or exchange houses cryptocurrencies. There are also several, such as Bitso or Buenbit, and it is quite simple to open an account to operate.

Keep in mind that cryptocurrencies have gained special relevance in recent times worldwide, not only because of the advantages that have to do with security and privacy, but also because of the price increase in recent weeks.

Therefore, it is not strange that many investors have looked at the virtual market, as a way to diversify.

In this universe, one of the options not to lose to the dollar is not buying US bills directly, but rather buy from Dai, a stablecoin (or stablecoin) that maintains a one-to-one parity with the dollar.

In this way, operating from the traditional financial system is avoided. It is legal and there are no restrictions, so a cryptocurrency is accessed immediately to save, invest, or to send to different parts of the world.

Created by MakerDAO, a non-profit foundation, Dai is a cryptocurrency that is generated by its users through collateral deposits and that it maintains its stable value around USD 1.

Behind this currency there is no centralized authority, nor a financial entity that plays with its value and that can be a point of failure for the system, but the price is regulated by the market. Since it has backup in Ether (one of the cryptocurrencies with the highest market capitalization), Dai does not lose value and supports market fluctuations, and the backup can be audited at any time from a computer.

Mariano Di Pietrantonio, leader of the DAI community in Latin America, commented: « Capital controls are natural triggers of activity in the crypto markets, and Argentina, being a country that has also been experiencing a growing inflationary period, is becoming fertile ground for the increase in DAI transactions « .

Plus, with DAI, you can freely receive and send money. Currently its users also use it to enter crypto investment funds or for their simple hoarding as a safeguard of capital, like the dollar bill.

Advantages against the dollar

According to the Buenbit Exchange House, there are six fundamental points that can be taken into account compared to the dollar:

Blockchain benefits: The Maker Protocol, which allows the generation of DAI, facilitates greater security, transparency and trust, benefits that result from Blockchain technology.

Transfer capacity: Unlike the dollar, DAI can be sent person to person, without intermediaries, anywhere on the planet for less than ten cents per shipment regardless of the amount moved.

Generation of immediate interest: There is a DAI “Saving Mode” or “Interest Mode”. This feature is a method that rewards for saving DAI, generating passive income from this same cryptocurrency. For its part, DSR technology, which controls your interest rate, allows returns to be credited instantly, unlike other currencies. At Buenbit, for example, stored DAIs produce immediate interest, which is credited every five minutes.

Lower exchange spread: The difference between the buy and sell value of DAI is low.

Automatic liquidity: There are no time limitations. The DAI holder can sell them whenever he wants without difficulties: without hours or banking impediments.

Ideal to enter the world of cryptocurrencies: It is exchangeable for other cryptocurrencies.

DAI in user-to-user operations

Binance is one of the best known firms in the world in terms of cryptocurrency exchange. At the end of last November, it had announced the incorporation of DAI to the Binance P2P platform, for the buying and selling cryptocurrencies between pairs, where

Binance acts as a collateral and security mediator.

Maximiliano Hinz, Binance’s Latam Operations Manager pointed out in this regard: “From Binance, we always seek to offer the products that best suit the needs of our customers. We have been working hard to incorporate DAI into our P2P offering. We understand that it is a type of digital asset that is highly sought after in Latin American markets ”.

Security and storage

In order to store DAI, one does not need a bank. One can simply download a wallet. If we consider DAI and the DeFi world, one of the alternatives for storage is the Status.im cryptowallet. It is a decentralized application that is all the rage in Argentina because, in addition to its security-focused values, it combines an electronic wallet for the Ethereum network, private messaging and a decentralized application browser.

This wallet allows you to access and protect Ethereum cryptocurrencies (like ETH) and stablecoins like DAI. But it also has a fully encrypted private messaging chat and a dapp (decentralized) web browser3.

Carl Bennetts, co-founder of Status, highlighted: “Today’s Internet infrastructure, like that of the financial world, is riddled with players who dictate how we can transact and even monitor our communications. The Status app is designed to protect private communications and allows total control over personal digital assets ”.

* Analysis by Arigato Consulting