Starting from Bitcoin, decentralized open source monetary policies are constantly emerging.
Written by: Richard Burton
Translation: Lu Jiangfei
How can we make money? This is an interesting question that I spent a lot of time thinking about. How did a new type of currency come about? Who decides how many dollars, euros, yen, and pounds should be in the market? When these currencies are created, who will put these currencies out? Why put money? To be honest, the “rabbit hole” of monetary policy is really deep.
Of course, I am also a newbie in this field. If I make any mistakes in this article, please correct me.
Currency history is a great history. My favorite book on currency history so far is “The Rise of Money: How Finance Affects World History” (The Ascent of Money) by Niall Ferguson. This book explains in detail The phased transition of currency, from the nick on the rock to the blockchain transaction that can sweep the entire planet in a few seconds.
And I want to focus on some of the changes that have occurred in recent years: from a centralized bank to a decentralized bank. If you want to understand some basic conceptual knowledge first, you can view it at this link .
Centralized bank
Every one of us now lives in a globalized society. In the United States, people always spend a lot of time thinking about who is allowed to lead the country, but they spend very little time thinking about who is allowed to lead our money.
Central banks around the world are establishing and maintaining monetary systems in various ways. It seems that those who manage these central banks are either appointed by high-level government or elected through internal elections, but for the general public, they are basically very It is difficult to understand the selection process of the central bank’s management.
If we gather the most powerful central bankers in the world in one room, it is estimated that there will be no more than 1,000 people in this room.
Think about it: less than 1,000 people control the pulsation of the world’s currency-don’t you think it’s a bit surprised?
Personally, this thing is really crazy!
EUR
I really like the picture below, in which Christine Lagarde, the former President of the International Monetary Fund and the current European Central Bank President, and her colleagues gathered together to see such a “tall” environment around them. What is embarrassing is that everyone sitting on the table has white sideburns.
When these old people decide to issue more euros, who do you think they are on the side of? Will they represent young people? Will it represent ethnic minorities? Or will it represent the poor? It is even unknown whether these people have thought about these issues in their minds.
Frankly speaking, these senior scholars should be responsible for the well-being of future generations, but maybe I was wrong.
Bank for International Settlements
Have you heard of Agustín Carstens? He is the general manager of the Bank for International Settlements (BIS) and the “incarnation” of everything about central banks that I despise. If you look at this video , you will understand what this guy is doing: He made it clear that the central bank should track all user expenditures in real time. You know, in some countries today, the government needs to obtain an arrest warrant to access user payment data. If Agustin Carstens, the “big boss” succeeds, what are they most likely to do? It’s simple: create a central bank digital currency (CBDC).
Agustin Carstens did not want to conceal the true intentions of the Bank for International Settlements. He even hopes to turn comprehensive financial supervision into the new normal.
It really turns my appetite.
Federal Reserve
There is no doubt that the Federal Reserve is the most successful central bank on the planet. They turned the US dollar from a single national currency into a global settlement currency. Just against this point, the Federal Reserve has accomplished a very remarkable achievement.
The picture above is from wtfhappenedin1971.com
The power the United States has on the global stage is amazing. When the Fed creates more dollars, the world must kneel down. There is a funny meme video about the Fed’s recent performance on Twitter, which can be viewed here .
But do you know who is running the Federal Reserve? I didn’t know until recently that only 7 people have control over the Fed.
As a global settlement currency, do you think that the fate of the US dollar is only determined by so few people. Do you think it is reasonable?
For me, the degree of centralization is too high!
21 million bitcoins
Bitcoin has completely changed the game. With the help of innovative agreements and very simple monetary policy, this new financial system has begun to emerge: if we issue all 21 million bitcoins in 144 years, let’s see what happens.
If you think of Bitcoin as a meme, then it can be said that this concept is amazing! Everyone is attracted by “21 million” bitcoins. The concept of bitcoin is simple, but at the same time, it is a bit too simple.
If 100 years later, we can adapt well to the “21 million” Bitcoin, then all currency problems in the world can be solved. However, ideals are full and reality is very skinny. I think a truly effective currency solution is much more complicated.
Do you think that the first monetary policy ever invested in blockchain will be the best solution that mankind can think of?
I do not think so.
Deflationary ETH
So far, the monetary policy of Ethereum is still pending. Unlike Bitcoin, the supply of Bitcoin is fixed from the beginning, while Ethereum does not have a fixed supply of money, but will continue to change over time or protocol development, but Ethereum’s monetary policy has been relatively mature and Continue to be enhanced. I think Justin Drake’s interview on Ethereum is one of the best ever. You can click this link to view it.
Justin Drake put forward a novel point of view. He felt that Bitcoin is expected to maintain inflation for decades, while Ethereum is actually likely to experience deflation within ten years or earlier. If it does happen In this case, the circulating supply of ETH will gradually decrease.
For a store of value, do you think it is better to implement expansionary policies? Or is it better to implement a contractionary policy?
For me personally, I like the value store of digitization and deflation.
Maker
In the field of decentralized finance (DeFi), one of the most successful projects is Maker DAO, which absorbs collateral such as Ether and mints a stable coin called “Dai”. The system has undergone two major revisions, and the current collateral lock-up volume exceeds 7 billion U.S. dollars.
The picture above is from defipulse.com/maker
I find that the magic of Maker is that anyone can contribute to the system or participate in the governance process surrounding its monetary policy, and many people gather every week to discuss interest rates and risks in the financial system.
I spent a lot of time researching the Maker protocol interface, and found that the people who built this system spent a lot of time and energy to ensure that it is safe for everyone, and all work is open source.
Do you think a more decentralized monetary policy is worth trying?
Personally, I think decentralized monetary policy is one of the most exciting ideas ever.
Fei
For the past four months, I have been helping the Fei Labs team prepare for the release of the new agreement. The Genesis Group has just launched and now anyone can participate.
The Fei team is adopting a new method of creating decentralized stablecoins, aiming to further improve the scalability and capital efficiency of stablecoins in the DeFi field, and is currently exploring many new experimental mechanisms.
In just a few months, many people are willing to try this new encryption economic mechanism. Isn’t it cool?
I am willing to join in.
What’s the next step?
In fact, I prefer to think of Ethereum as an open source and open economic engineering system, where everyone can publish anything and interact with any type of code-“Ethereum is a protocol of agreement” .
In the next ten years, we will see the emergence of various open source monetary policies. Today, most stable currencies are anchored to the U.S. dollar, or effectively create a synthetic asset.
In the near future, we will see more interesting forms of stablecoins, such as RAI, FLOAT and OHM. These stablecoins are explained in detail in this excellent article by Messari columnist Ryan Watkins.
Are you excited?
I am excited!
Source link: ricburton.substack.com
Jerome Powell, Chairman of the Federal Reserve
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