Here Alan Greenspan (Chair of the Federal Reserve of the United States - 1987 to 2006) is answering David Gregory in 2011:
David Gregory: “Are U.S. treasury bonds still safe to invest in?”
Alan Greenspan: “Very much so. This is not an issue of credit rating, the United States can pay any debt it has because we can always print money to do that. So, there is zero probability of default.”
Current Central Banking systems have the power to print money out of thin air. Solving this issue was at the core of Bitcoin’s creation. Now we have technologies which replicate the same systems, but in a more trust-less manner. For example, MakerDAO.First: What is MakerDao?
The MakerDao project created the DAI stable token. A stable token is pegged to some fiat currency, which allows it to be a unit of account. Dai is a decentralized stable coin pegged to the US Dollar value (i.e. 1 Dai = $1).Think of Dai as an electronic dollar; a dollar on the Ethereum blockchain.
Dai token governance depends on MKR token, which makes it a DAO (Decentralized Autonomous Organization), hence MakerDAO. At the time of writing this article, the DAI system is 150% collateralized — meaning to get 100 DAI you need at least $150 worth of Ether (ETH).What is CDP?
A Collateralized Debt Position (CDP) is the only way to create DAI. According to MakerDao white paper:Anyone who has collateral assets can leverage them to generate Dai on the Maker Platform through Maker’s unique smart contracts known as Collateralized Debt Positions. A Collateral Asset is a digital asset that the decentralized Maker Governance process has input into the system.
In simple words, a CDP is a loan taken against a digital asset (such as Ether/ETH). When you open a CDP, the system will generate Dai.CDP using Dai JS
Now let's play with Dai JS and create CDP using it. Before that, we need to perform a fe...