You are viewing a single comment's thread from:

RE: Wealth Redistribution via Cryptocurrencies

in #cryptocurrency4 years ago

It is interesting to me to consider that all life in this universe is a "dissipative structure" -- meaning that life represents complex, self organizing systems that emerge as they feed on the energy of the universe as it marches in a steadily decaying process from big bang (whatever that represents to you) to heat death. Thus even though entropy always increases, part of the process through which this entropy increases is the emergence of systems that help "dissipate" this energy.

Thus suns that take small, higher energy atoms and convert them to larger, lower energy atoms represent the emergence of a system that helps "dissipate" the energy locked into the nuclear bonds of the smaller, higher energy atoms.

Similarly, chemical processes on and in planets represent the freeing up of energy locked in chemical bonds.

All of life is built on the process of converting higher energy stuff to lower energy.

When considered from this big picture perspective, then, it becomes clear that the real money, the real currency, is energy. Money is just an overlay -- an energy translator, if you will, that allows us to compare dissimilar items (grapes versus iron ingots, for example) that would otherwise be extremely difficult to tell exactly how much "energy" each one is worth.

Money, unfortunately, does open up the possibility of gaming the system -- of trying to force society to accept the idea that an item or a service is "worth" a certain amount of energy when in fact it is not. This represents trying to cheat society by changing definitions -- no different than changing the definition of a foot to 11 inches, a minute to 65 seconds, or a pound to 15 ounces.

But this introduces chaos and incoordination into society by forcing imbalances into the delicate, adaptive system we call our economy.

Fortunately, the internet is reducing the barrier to entry for society to go around these distortions.

I'm looking forward to the introduction of a cryptocurrency pegged to a real, physical standard -- 1 coin pegged to an ounce of gold or a barrel of oil.

Anyone interested?

Sort:  

We have USDT pegged to the USD, but that's not a true cryptocurrency. And like the tether there exists the potential to game the system if you peg a crypto to a physical asset. That means you need to add regulation and likely some degree of centralization to ensure the peg remains intact and covered by a sufficient amount of asset.

I do like your energy analogy, but really currency is just a way of valuing items - no matter what form that currency takes. The benefits of crypto are in its decentralization and lack of reliance on governments and third parties to verify trust, as well as the lack of inflation (deflation in fact) which is found in coins like bitcoin.

I'm looking forward to seeing a world without fiat currencies or centralized control over the flow of value (i.e. money)

The way I see it, the energy/currency link is not an analogy -- it's reality. Currency/money of all types, no matter what it consists of, is an overlay over the only real unit of account there is, which is energy.

Can't print energy. Thus any currency or money has no effect on the real money, the real unit of account, which is energy. That's why any "created" money just shifts resources from one pocket to another, because the system it sits inside of has not changed one iota.
But inflation usually does so surreptitiously, which is why inflation is so effective at robbing people. They don't see the hand in the pocket. Instead they see higher prices, and because of how our brains work, we see "more expensive" rather than "devalued yardstick."

Regulation is a monopoly. Which is why it is prone to being gamed -- monopoly represents barrier to entry, which is the perfect situation to game -- those being gamed can't avoid it. How's the monopoly that central banks and governments have working out as far as protecting the fiat currency system from being gamed? Monopoly goes from being protective to an intractable, unremovable foe once it gets corrupted.

Best protection against being gamed is no barrier to entry -- if a system gets corrupt, the market goes around it and leaves it behind.

It makes sense as I know how energy can't be destroyed or created, it just changes from one state to another. If we take that as our thesis, then certainly the shift from fiat to crypto is simply a change in the state of the energy that moves value in the universe.

Whether that ends up as a good thing or a bad thing is still determined by our reaction to the shift in energy. Those who favor the old system will fight any change in energy patterns, but the change could be strong enough to overshadow that fight.

If we copy nature, we'll be ok.

Nature doesn't present any barrier to entry. Nature is an "open" competition -- you bring any rig you want to the race.

That's how our money should be. Open competition is what will keep our money honest and stable. Always cracks me up when people say "money is so important that we have to exert a monopoly over it" -- because monopoly is what will guarantee that it will be pimped into oblivion.