Monday, June 17, 2019

The Emergence of Cryptocurrency and Wealth Redistribution

Generally, this year has not been really good for cryptocurrencies, especially relating to their prices which fell in January and has been topsy-turvy since then. Despite that fact, prices and technology rarely come in handy, as there have been notable improvements such as Ethereum’s side-chains and plasma or Bitcoin’s Lightning Network and Superspace.

This piece centers around cryptocurrencies and wealth creation in the society, though everything here seems to be based on personal opinion, attempts are made to make sure that the information is as reliable as possible.

Growth Accumulation VS Growth Redistribution

Undoubtedly, every generation of mankind usually sees continuous economic growth as one of the most important quests. Wealth creation mechanics often serve as a yardstick for measuring first world country, second or third even the industrial revolutions revolves around this subject matter.

Logically, any government will find it challenging to change monetary policies to assist citizen’s wealth creation if the financial system is inflationary as future money will always be worth less than the present money. There is a strong likelihood that if the debt-based system could have a solution, it might be connected to a more suitable redistribution of wealth.

Though there are several ways in which the above-stated outcome could be achieved, for example; through income distribution STO’s, utility via rewards, airdrops, and bounties or even an entirely new token scheme with both income, utility, and governance. For this piece, we shall consider decentralization as it allows for various kinds of money system.

Redistribution Occurs When Paradigms Changes

Undoubtedly, there are several pessimistic points of view against free money creation, have you considered taxes? Asset insurance? The million-dollar question now is that, will the government still take responsibilities to protect its citizens through public sponsored schemes? Have you ever considered how regulatory agencies adapt to overcome the challenges of decentralized, non-proprietary and permission-free protocols?

We should also consider organizational theory, which is about how companies’ performance is affected by social logic. Also, there are soothing conclusions with the requisite tendency to assist us in better understanding the role money plays in our society. Notably, companies which have strong social values are able to maximize both consumers and suppliers’ utility by not maximizing profits.

Real Life Adaptation

For instance, if an individual buys Rice in the market which also means the individual is purchasing Rtoken (the rice token); note that Rtoken is the digital representation of the physical product in this case. The individual will seem as though he is buying Rice, but in reality, he is buying tokens which is the representation of a certain amount of Rice.

Noting that the individual owns Rtokens which he is enabled to spend within the Rice community. This implies that a token can reward users at the same time as they serve a utility purpose thereby serving as both money and asset properties. The money is converted into a token each time a purchase is made which, in turn, rewards the supplier, company and other customers as well.

Let us assume that money used to buy Rice is then redistributed to all holders of the token; this will serve as an incentive to agents as they would see value in the token. With this logic, the assumption is that every interacting agent will see value in the token.

However, there might be a question of what will happen if either token prices got devalued? What if it explodes? The answer is simple, if the tokens get devalued, automatically those cheap tokens as each token awards more milk while the latter question can be answered with the introduction of other forms of money to be used for the buying the product.

The Utility Argument

From the Utility point of view, if Rtoken is granted utility as in the ability in a different form of governance or the capacity to boot-up certain suppliers by simply inducing a game-like tactic which gives capacity to delegate tokens based on quality, quantity or even geographic location to token holders. We should also consider the varieties of behaviors depending on agents’ social logic. Social logic simply gives all participants rewards on every transaction by making the money-asset of a transaction the item traded; the reward.

Interestingly…

Due to the convertible nature of tokens against all other forms of currency, the value can be the reward as it is possible to make a trade by batter which implies that the same token, which is traded against rice, can also be traded against other tokens rewarding different products. This brings some entitlement as opposed to the money traded in a conventional credit-debit system.

The social logic is more like hybrid organizations as it collides with the profit-making logic, did you ask the question “how?” the answer is simple, it would make absolutely no sense if the if growth is measured by itself and not by its distribution. Bearing this in mind, companies develop and circulate value via the members of its society; thereby, coming up with a new set of models which is premised on maximizing community utility instead of company profit as critics would have speculated.

Like most virtual currency having a limited supply, the Rtoken model, which is stated above could be twisted to have a maximum supply of the tokens so as to create money with deflationary elements. Independently, even with the existence of an inflationary token model destroying value as time goes by, because actors are creating currency change, from central institutions to small every-day organizations, power structures also change.

Conclusively;

On a rather conclusive note, humankind will forever have the need to work so as to create value, but money could even be well distributed because a network can only work if the agents of the organization play their role; such is the case of value creation. Whether as an employee, investor, supplier, consumer or citizen; everyone has a role to play.

Due to the existence of a money-asset, which equally serves as a reward and then granted of utility purposes within its ecosystem, the value of tokens becomes easier to get as it circulates as a participation rewards almost automatically. In this case, money would act more like energy does, as anyone who engages in a transaction, in turn, receives a value. In this sense, money does not evaporate instead it changes form into another form; this will add value to the world of money.

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