UK-based firm Saga has launched a cryptocurrency token SGA that is similar to Facebook’s Libra in that a basket of fiat currencies also backs it.
Saga’s Board of Advisors includes luminaries like Nobel Laureate Myron Scholes, JPMorgan’s outgoing president of international business Jacob Frenkel, and VIX volatility index pioneer Dan Galai.
Saga’s investors Lightspeed Venture Partners and Mangrove Capital Partners, have been issued Sagas “genesis” or SGM tokens, which can be converted into SGA after launch.
An important difference between Saga and Libra is that Libra will be backed by a separate asset class consisting of a basket of fiat currencies, which will be administered by a group of 21 financial technology companies. Central bank deposits will decide the value of SGA in a basket of currencies that make up the International Monetary Fund’s (IMF) Special Drawing Rights (SDR). The SDR basket mostly has US dollars with smaller amounts of the euro, Chinese Yuan, Japanese Yen, and British Pounds. SDR’s are international reserves held by central banks to supplement their national reserves.
The SGA will be administered by the holders of SGA tokens, who will be to vote to choose the Board of Directors, who, in turn, will determine the monetary policy to be adopted for the token. Thus, holders will have a direct say in the administration of SGA tokens.
Moreover, Facebook was working with Calibra to create a digital wallet for Libra. Thus, users who buy Libra would also have to use the Calibra wallet to store it and use Facebook mandated payment system. Thus, Facebook was providing an ecosystem for Libra, which could also be construed as a form of centralization given its large user-base.
Saga founder Ido Sadeh Man explained the difference between Saga and Libra. He said,
Unlike other players, we don’t want to be the issuer and the payments layer and the custodian. We’re focusing on the monetary part of it, on the issuance of a sound currency for global use, and we will increasingly liaise with partnerships in the realms of custodianship and payments.
A problem with Libra is that 21 companies will manage the fund that will decide its value. These companies can monopolize the payment systems of Libra and monopolize the market. It is not the case with SGA.
Thus, Saga will only be acting as an issuer of SGA tokens. The token can be purchased from the Saga website and is listed on the cryptocurrency exchange Liquid.
Saga has written smart-contracts on its blockchain to ensure the ratio of supply to demand of SGA tokens remains unchanged.
Saga hopes to see SGA being used as a “complementary currency for cross-border payments.” It is very useful where there are large fluctuations in currency values. Payments in SGA will reduce transaction costs and increase transaction speeds as there is no physical transfer of money. The sender will deposit SGA in the receivers account with no intermediaries thus, reducing costs. The blockchain will record the transaction, which cannot be erased or changed in any manner.
Saga claims that its compliance standards are equivalent to those for fiat currencies in conventional banks. The standards ensure that only persons who fulfill the KYC criterion can buy SGA tokens, which prevent money laundering and fraud.
The fact that Saga will not have a readymade user base of millions may work in its favor as a major source of apprehension among national governments for Libra was that with its millions of users, any wrong move by Libra could jeopardize the economy of entire nations.
Sadeh Man clarified that SGA tokens would not be launched in the US. Speaking on the matter, he said,
We only want to operate where it is clear we are respecting compliance.
As we all know that cryptocurrency is having great potential to replace fiat-currency. Many investors invested in Bitcoin and other cryptocurrencies to earn profits. If you also want to invest and earn profit from Bitcoin or other cryptocurrencies, then Bitcoin Era is one of the best platforms. Check Bitcoin Era Review & get more information about this innovative software.
