RE: Get Ready for a World Currency
Many points are raised in this article and me being an average joe reading this do not have the expertise to understand the forces at work in the world of finance so I can't make an intelligent argument to most points brought up. Be that as it may here's my take on money and crypto. For me the individual, money in whatever medium of exchange it takes equals stored value. I perceive and like others have agreed to trust the established value relationship at the time of the transaction. So crypto's come along and like others I see an agreed upon value established by exchanges and I can measure the amount of risk I am willing to take to participate in storing the value of my energy in that crypto be it Bitcoin or any of the other altcoins. And like fiat the agreed upon value of exchange has a measurable quantity, I place my trust in it.
I have watched and participated in the development of Bitcoin from the beginning . Why? Mainly as a bystander witnessing the development of at first a curiosity and later a recognizable development of a large scale economic phenomenon. I don't understand the technical side of it but I can read and see the immense amount of development going on in blockchain technology and the proliferation of altcoins. I am witnessing what I see as a fundamental shift from fiat based monetary systems to a digital based system tending to decentralization. I know this a broad simplistic view and I know we are currently in a state of transition that will take some time so I sit here and witness.. Thanks for your hard work and giving me an opportunity to examine my thoughts on medium of exchange that affects all of us.
One of my goals in my (still ongoing) blockchain development work (which was unfortunately significantly stalled for a few years by illness) is to try to create features and a system that gets users as interested in what they can do with their cryptocurrency tokens that they can’t do with fiat systems (including Paypal et al) as they are interested in the investment appreciation of the fiat exchange value of their tokens.
If we can accomplish that goal, then we will have achieved what I believe is a Schelling point for a (as quoted from my blog):
Steem is vying to be that system. Do we value our STEEM as much for what we can do with it as the investment return on STEEM (or the STEEM that can be extracted by blogging)?
Bitcoin probably already has a lock on the intrinsic value of a reserve currency for cryptocurrencies, and the medium-of-exchange to/from fiat. Thus I argue the worst outcome is to fork Bitcoin in August destroying the immutability which insures a 21 million coin limit (and I think all Bitcoin forks will fail because whales will protect the intrinsic value of Bitcoin).
I realize it is unsatisfying to Bitcoin fans if Bitcoin will not scale, but Bitcoin does not need to scale as it can be the on/off ramp to fiat and BTC saving for the altcoin that provides scaling,. Since there will likely be many such competing altcoins, then BTC remains the common denominator for investing in the crypto sector, i.e. the reserve currency of cryptocurrency.
Even if Bitcoin was forked to add some weak ass non-scaling lie, it will still never be that cryptocurrency that provides the breakthrough I am alluding to above. For that, we need competition and experimentation amongst altcoins (not forking the BTC unit into chaotic confusion). Thus we need a stable reserve cryptocurrency and that is Bitcoin. We have it, so no benefit in destroying it whilst trying to make it be something it can not be. Transaction fees will go up on-chain, so eventually those who can not afford have to move to an exchange or an altcoin. That drives a market need for altcoins to compete for the best solution.
Edit: Bitcoin can scale somewhat simply by agreeing on block size increases.
@anonymint Thanks for your comment, this is a very important point that you brought up:
"Steem is vying to be that system. Do we value our STEEM as much for what we can do with it as the investment return on STEEM (or the STEEM that can be extracted by blogging)?"
This is crucial. It's amazing that so many people are using Steemit without even being aware that it is a Blockchain or that it has a cryptocurrency making it work. I suspect that a higher and higher % of new users will not know about this ether and that people will use Steemit without knowing about blockchain in the same way that people use the internet today without knowing about the http protocol.
Sorry to hear about your illness, glad that you seem to be doing better now. When did you first hear about cryptocurrency and how did you become involved in it?
You said, "system that gets users as interested in what they can do with their cryptocurrency tokens that they can’t do with fiat systems". Not quite sure what you meant by this?
That is a good point that if attain mass adoption, most users won’t even realize they are using a blockchain.
I mean when there exists desirable things they can’t do with fiat. For example, earning tokens from writing and commenting. Beyond that is for example displacing all the centralized databases on the Internet, smart contracts, distributed microeconomies/micronations, decentralized speculation, new forms of gamification and monetization of Internet and computer activities, etc..
As I wrote at the bottom of my blog, I read Szabo’s Bitgold in early 2009 after writing something somewhat analogous 14 days before he published:
I heard about Bitcoin sometime after that (perhaps it was 2010), but I was distracted on other life matters. Risto Pietila and I were dealing in physical silver from 2008 to 2009 (we had met on Jason Hommel’s forum). In 2012, he asked me about getting into Bitcoin but I told him I was preoccupied with my illness (which was acute hospitalization in May). In early 2013, he asked whether he should sell $100,000 of silver and buy BTC at $10 and I said yes. I wasn’t able to join him because I had lost $75,000 of fiat in 2012 (side-effect of the flight or fight effect of my illness) and “theft” of my silver and gold over the years. From 2013 to present, I became expert on blockchain technology, having been a computer programmer since age 13 (age 52 now).
My bad I forgot you mentioned having written something analogous to what Szabo wrote. Not many veterans like you in the space now, definitely glad I discovered your blog!
Might want to split up your comment into separate paragraphs.