Digix: Hard Money on the Blockchain
I investigated the hard money movement a decade ago, when Ron Paul was running for president and it looked like the US dollar, backed only by the full faith of the government, was going to be imminently destroyed. In 2008, it seemed like only a return to honest money would allow for real economic growth, and every fiat system was doomed to hyperinflation. Hard money economists seemed to see the Great Recession coming, and I found myself cheering a return to the gold standard (however fanciful the idea of the Federal Reserve handing that power over voluntarily might be).
While still wary of the dollar, I’m much more comfortable with the current system. It's incredible that the Fed has avoided hyperinflation for 100 years, even if the dollar is only worth about 3% of what it was against gold 100 years ago. But the US dollar being backed by the "full faith and credit of the US government" is not a little troublesome.
Just another reason why I’m excited about Digix Gold.
Digix Gold (DGX) is the closest thing to a free market provided gold money that we’ve seen in the past century. One DGX token is one gram of gold. It is fungible, and it is divisible to fractions smaller than a penny.
Digix: next to gold in hand, it’s your best bet for a free market gold standard.
It is possible economies pop up that are run solely on DGX. What might the effect be on a country like Venezuela?
Gold bugs have traditionally been “gold in hand” types, wary of technological solutions with offsite storage, but gold in hand is still very difficult to store and spend. DGX is not. Ethereum blockchain transactions take about 15 seconds, so DGX coffee purchases-that’ll be .05 DGX, sir-are possible.
DGX will bring a whole new class of users to Ethereum, hard money fans, who have thus far avoided the blockchain due to the lack of a hard asset backing tokens.
DGX requires a certain amount of trust in third parties, like anything. In Bitcoin, this trust is placed in wallet providers, exchanges, and the program itself. There is a preponderance of evidence that Bitcoin is safe, and that major wallet providers have created bug free software, but there is trust nonetheless. In the case of Digix, the Proof of Provenance protocol and third party audits of gold in storage help users trust that the DGX tokens are backed by 100% gold. And DGX holders can travel to Singapore, where their gold is held, and request delivery...although I imagine savvy gold dealers will accept DGX as payment in other areas as use increases.
Many gold bugs are also fans of silver. There will most likely be a DGX silver token within a year or two, depending on how quickly the DGD governance token holders are capable of voting on what to produce next.
Finally, DGX will be immune to the swings of Bitcoin and other cryptocurrencies. Gold is far more stable than Bitcoin and Ethereum, giving more conservative buyers a place to actually store value.
Comparing Bitcoin and Gold Volatility...no contest.
Whether or not gold is the best choice for a money in the 21st century remains to be seen, but we actually get to run that experiment now. DGX is a fundamentally different token from all other cryptocurrencies to date. It offers more options for people who may not have originally been interested in blockchain technology, and want to see what free market money might look like. With DGX gold, it's looking pretty good.
Disclaimer: I am long DGD.
-Jeff
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Posted from my blog with SteemPress : http://steemmaker.com/digix-hard-money-blockchain/
I suppose it was just a matter of time before we saw something like this, a combination of hard currency and the blockchain. But I like it. I like the idea of money being backed by something that has value and holds it.
I'm interested in knowing why you're more comfortable with the current Fed system, though? In my mind, it's just gotten worse. We rely completely on being the world's reserve currency, so if that continues to go away, it seems like we're looking at a global economic mega-tsunami.
Thanks, those are good questions and I suppose I could write a bit more about my thoughts.
I think the current system is fragile. It's really bad to have a few people have so much power. I'm a bit surprised, after watching a number of blockchain projects, that those behind the Fed have shown as much restraint as they have.
Compare that to what bad actors in steem have done to vote themselves portions of the rewards pool.
In summary, I think the Fed has done far less worse than it could have, and that has surprised me.
Now, about money. I love the idea of moving to more free market money solutions, which I think cryptocurrency offers. I think free market money is much better for the world overall. But I also think we're going to suffer a lot of pain moving from where we are now, to where we'll be when billions of people use cryptocurrency in the majority of their transactions.
And there will be new things to worry about when currencies like Monero are commonly used. The ability to spend and save in secret is incredibly powerful.
I have always marveled at the resiliency of the US economy, in spite of monetary policy. I'll take your word for it on the Fed showing restraint. I've just considered it a miracle that we aren't a third world country by now (or, maybe better put, we've managed to drag everyone else down with us).
I've been wondering whether or not everyone here believed that moving so many people to STEEM or a combination of different cryptos was going to somehow be this smooth transition. Right now, we're already seen the inequities in the system, not just who holds power, but how much buying power STEEM has in some areas compared to others.
Then, there's the large pools of STEEM and SP just sitting here, which for some places, equates to the size of their entire economy. It's supposed to be a good thing that not all of that is active, but...
There is a lot of power, as you say, in spending and saving in secret. Does that same power translate when it's billions doing it, and it's no longer a secret?
Yes, and it doesn't matter if it is billions or millions, either way, you have incentives and abilities to fund terrible stuff with no chance of discovery.
I am overall in favor of privacy, and I'm not suggesting we try to outlaw this stuff. I just think about how hard it can be to find the really bad bad guys who want to like a city, or release poison gas, or a bioweapon, etc. And it can be funded anywhere.
On a smaller scale, some of the private features of the internet have made it easier for child porn and other horrid stuff. Blockchain storage makes that stuff impossible to delete. That doesn't mean drop blockchains, but it does mean we need to consider what we lose and what we gain when we develop and support these things.
I think a lot about Plato and the Ring of Gyges.
High moral character or lack thereof comes in to play, definitely, whether in the darkest corner or in the revealing light of day, and all points in between.
Just because you can do something doesn't mean you should. I read a lot of posts talking about how censorship doesn't exist here, but usually it's while trying to justify some behavior that wouldn't really fly anywhere else.
I think some people think that common decency is akin to censorship.
Privacy vs. fostering criminal acts is going to be an ongoing issue for sure. It's not an easy issue to sort through, especially when you espouse guilty until proven innocent, or not being hauled in until you've actually committed a crime, even if you're threatening and have the means to do it.
It seems like that we have the opportunity to keep things within the daylight side here on the blockchain if we balance it with some security. I don't know. You are absolutely right. A lot more thought needs to go into these kinds of things beyond what's expended to create it, just because we can.
You have definitely peaked my interest in this crypto, I love the shiny stuff. I believe we should have never left the gold standard. Maybe we wouldn't be in the predicament we're in now, print, print, print. 💸💸💸
I think expecting a government to stick with gold is like expecting a room full of children to not sneak a cookie from an open jar.
Glad the free market is giving us options.
BTC and other currency freefall .. I think it will be continuous because google and other social media site banned crypto.... So without controlling this situation , we should not invest in blockchain
Whether or not you invest is your choice, but I try not to let price changes affect my attitude towards investing.