A Model for Creating a Stable Cryptocurrency Using FIAT Currency for Global Electronic Commerce

Abstract

Universal access to financial services for a large portion of the world’s population and efficient or rather effective cross-border retail payments is crucial. The traditional bank-based ecosystem is characterized by centralized control, slow transaction; high transaction costs both for local and cross-border payments. The first wave of crypto assets and cryptocurrencies, of which Bitcoin is the best known, was envisioned to address these and other issues. However, they have so far failed to provide a reliable and substitute means of payment, or store of value. They have suffered from highly volatile prices, limits to scalability, complicated user interfaces, and issues in governance and regulation, among other challenges. This research, therefore, sought to develop a model that creates a stable cryptocurrency to address the limitations of the first wave of cryptocurrency and strengthen the existing payment ecosystem by serving as a key alternative means for digital transactions and enabling growth in the digital economy. To form a basis for this study, a survey of the literature was carried out to assess the weaknesses of the existing cryptocurrency models. The results of the literature survey exposed several weaknesses including volatility which formed the center of the model design. Stability is fundamental to any payment system and at its core; the model for creating stable cryptocurrency was built on this objective to bring a greater level of stability and resilience to the payment system. Scenario-Based Design and expert focus group discussion methodologies were used to design the model. At the end of the design process, a report of the model's functional and system requirements was realized. The design was implemented using a rapid prototyping approach to realize a minimum viable product with sufficient features to evaluate the project's overall goal. The model prototype was evaluated in two phases. In the first phase, a functional testing approach was used to ascertain if the model conforms to design objectives. This was a purely technical evaluation that used test cases to see if the model requirements were attained. To ascertain the model quality, the evaluation in the second phase was done based on ISO 9126 quality framework. The ISO framework was used to design a pilot testing feedback form that intended to identify issues related to the various model components and gauge user experience. At the end of the evaluation process, the functional testing proved that all the model functional and system requirements were satisfied satisfactorily. The feedback from the pilot testing also indicated that most of the pilot testing participants were able to accomplish all the model functionalities. The majority of pilot testing participants also strongly agreed that the model satisfied all the quality attributes based on the ISO 9126 framework. The model verification and validation results showed that the model design satisfied all the intended objectives. The overall idea was therefore found to be feasible and practical. In view of the model’s design philosophies, it is recommended that new opportunities for the model in the evolving payment landscape be uncovered and new design features added, tailored, and implemented to serve each unique need based on any unique circumstances.