Demonetizing Money
We are witnessing something historic happen right before our eyes. Not even a decade in, we are seeing the course of humanity permanently altered. Sadly, at this point, few in the world are even aware of it.
Technology has the amazing ability to drive the costs of things down. Nowhere is this more evident than the development of the Internet. We see many instances where, because of the Internet, the cost of products or services plummeted.
The most common example is Amazon. The retail giant minted money over the past decade simply because they do not have the overhead that physical retailers have. By offering products online, this lowers their costs since their physical expenditures are for warehouse space. This is a lot less expensive than large stores or prime retail space in major cities.
That is not the only evidence we see. Look at what happened to music. Back a few decades, music cost $10-$15 in the U.S. for a cassette or CD which contained 7-10 songs. Today, we have freemium services like Pandora which provide 40M songs if one will listen to commercials. If not, for the price of one CD, one gets commercial-free music in virtually unlimited quantity.
We saw the same thing happen with video. Youtube (and now D.tube) is giving people free content to watch. Add in Netflix which charges about the cost of a CD, and someone can watch 168 hours worth of programming a week. We can binge watch our lives away.
Finally, the communications world was also turned upside down. There was a time where calling outside the local area cost money. Now, with the online applications, that cost went away.
Thus, we learn a couple things about the Internet:
A) It creates abundance in whatever area it enters
B) It demonetizes that same area.
Music, video, and communications are now abundant and basically free. If they are not free, there is minimal cost.
Now for the fun part: the Internet came to money.
Hence, we are witnessing the demonetization of money. The paradigm is shifting from the scarce to abundant. Steem is providing a prime example of how this works. With the anticipated development of the SMT protocol, Steem will become a coin factory. Everyone on here will be able to create tokens.
Yeah but most of them will not be worth anything. In fact, the entire cryptocurrency world has no value; isn't that what we are told?
Naturally, for those of us who looked at it, we realized that the fiat world has no value either. Essentially, money is only as good as the trust people have in it. When people believe something has value and is worth utilizing, then it is. If said trust is broken, as in Venezuela, fiat becomes worthless.
A lot of our monetary trust comes down to our belief in the government. This is a problem for the fiat world since people are going to realize, over time, that our algorithms are more trustworthy than their governments; or even worse (for them), more trustworthy than their central banks.
This is a concept that most people have a difficult time wrapping their heads around. Many of us are aware of this since we tried to explain cryptocurrency to others until we are blue in the face. Ultimately, they did not get it. It will take some time for the masses to catch on. This is a radically new concept.
The existing institutions are going to put up a fight just like the long distance phone companies, record labels, and newspapers. They all fought the good fight only to succumb to the two tenets of the Internet. Their profit margins was squeezed to zilch. Nobody is going to pay a premium for something that is abundance and available.
If we fast forward 12 months, we will be about 7 months into SMTs. Can you imagine how many coins there will be on this blockchain by that time. There could be hundreds of applications all spitting out utility tokens. People are going to be earning tokens for doing all kinds of things. Whatever we are experiencing now, we can ten-fold it. That is how abundant things will be.
Some might suggest that most of those tokens will have no value. That is incorrect, they will have value since they will be paired with STEEM. Sure, the conversion rate might not be great and it might take a lot of a SMT to get 1 STEEM but it is still convertible.
In my mind, this is the golden nugget. STEEM is going to be of great value since we are already seeing how scarce it is. When you look at the amount of liquid STEEM that is available, it becomes quite clear there is not a lot floating around. When we have hundreds of applications along with a million individuals, things are going to get really tight. SMTs will be the way people are able to get some STEEM.
It also will answer the question what do you do with it? ABC SMT-created token might not have a great desire by people but, if enough are amassed, one can spend them on STEEM. The internal exchange will always take them. This is crucial.
As tokens enter people's wallets, they will continue to grow. With that many tokens being paid out, most people will be amassing more than they spend. As their accounts grow, they are able to convert some of their holdings into STEEM to get what they need. We are seeing a few different projects that are working to bring STEEM to the fiat world.
For many, this is still something that is hard to comprehend. One way to shift the thinking is to eliminate fiat from the equation. Naturally, this is not going to happen for some time but picture the day when the world is mostly crypto. Hence, once you are operating in that realm, there is no need to touch fiat. As long as a primary coin or two can be accessed from the SMT, it is able to operate in the physical world.
What this opens up access to is the funding of whatever is needed. Many think in terms of lambos and mansions. That is just a sliver of spending. The true benefit is all the funding of R&D that can be done. How many projects are shelved because of a lack of money? Now, because of the Internet coming to money, that is not a problem.
Besides, why would you pay any money for a Lambo or a mansion when you can just 3D print one out for a fraction of the cost?
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Haha this keeps me talking about Benjamin Franklin's The Nature and Necessity of a Paper Currency, I mentioned this no less than 4 times in the last couple of days in different places. Why I mention it here? Because you bring up the need for an abundance of money, which is what the premise of Ben's work was pinned on.
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Wow, that is an oldie but goodie.
If memory serves me correct, I believe he talked a lot about land, labor and commerce.
Could the updated version be:
Land: our stake in the digital realm through the different tokens we hold
Labor: AI or automation: all of us being able to "employ" that and not have it in the hands of a few feudal lords (FB, Google, Governments).
Commerce: the ability to buy, sell and invest in the digital world via token for token swaps regardless of the tokens.
Food for thought.
That's exactly what it was, brevity the soul of wit.
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@baah gotta give you mad respect for mention a hero of mine and for logic Benjamin Franklin!! Thanks !
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First, I really like your posts because of the constantly positive take you have on things. I admire that because it's easy to focus on the negative, and you do a good job of being consistently positive.
I would make one distinction in your post and that is the difference between "money" and "currency." We often use them interchangeably nowadays, but they're different.
Currency is:
Money is:
Cryptocurrencies are currencies. They aren't issued by a central bank, but they're still a currency as they aren't a store of value over time. Since more cryptocurrency is being created, the value of it goes down as the currency inflates. They're also created by someone, whereas money already exists in limited supply, therefore the amount can't be increased.
I think SMTs could be a huge boost to Steem, and I do think that's valuable, but because they're going to be currencies, we'll have to be careful which SMTs we invest in. Because like Venezuela's Bolivar, you have to have faith in the organization that issued it. If you trust the wrong people, your investment can easily go to nothing.
I'm not sure we'll ever really be able to "demonetize money." The "quantitative easing" that US government has been doing since 2008 has been to increase the availability of currency, but all they're doing is inflating the currency to make that currency available.
You can demonetize a currency. That happens all the time when governments inflate the heck out of their currency and then have to demonetize it and start all over. I don't know that you can demonetize money. Money (gold and silver) just is. As far as I know, only Midas has ever been able to make more of it. Ha ha.
Thanks for a thought-provoking article! I'd love to hear your thoughts. :)
Hidden Secrets of Money
I'd point you to www.bibocurrency.com and mention that the function of measurement is invalidated by the function of storing value in the same way that the function of a unit of measure of length is invalidated by making a specific length of rope as the only unit of measure. The site though does a much more thorough job at demonstrating how one function invalidates the other functions of currency and details exactly why money is, and what is only tokens or stores of value, as money and currency don't have any difference since currency by it's very tangible premise of your definition with "portable, durable" is describing a store of value.
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Also by following the link I'm persuaded to mention that, as Benjamin Franklin observed in his treatsie on Paper Currency, gold and silver don't make good stores of value and even worse at providing the necessary amount for world commerce let alone to compensate work.
http://projects.exeter.ac.uk/RDavies/arian/amser/chrono.html
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So wird es kommen.
Super Beitrag.
Hat wirklich Spaß gemacht zu lesen.
:-)
Hi A very positive and realistic message. Thank you for Sharing.
Yes we are at a new revolution in peace in people controlling their own lives. This is wonderful.
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This is a great post @taskmaster4450, thanks for putting this one together for us.
How many times have you found yourself trying to explain cryptocurrency to someone and they think you're nuts? :) Now this:
They'll think you've really lost it haha, but I totally understand the possibility of that; heck, it's already possible!
I agree with just about everything in this post, except the idea that our monetary trust comes from belief in the government. It seems to me that most people trust fiat because other people trust fiat. They grew up in a world where people use it, so they use it, and they never even question where it comes from or why we use it.
I think step one for crypto is getting it into the hands of as many people as possible. Step two will be more online merchants taking notice and allowing people to spend crypto. Step three is that there's hardly anyone left using cash because everyone has some crypto and it's accepted everywhere.