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Transparency: The downfall of centralized economies


3 months agoBusy7 min read

In a session today I was explaining my thoughts on debt and value to a client as far as printing money is concerned. The more I spoke through it, the more obvious the scam of it became in regards to how our conditioning to value the token of money outweighs what that token represents, what is real.

What this means is that the token can be printed to buy what is real in an endless cycle of debt until what is owed exceeds the value of all things that are real. It can never be paid back, no matter what. So they print more. The only things that can actually hold value is what is real and, the only things that can represent that value is a token that can't be created through increasing debt.

The other day @exyle posted about a Drug Wars bug that allowed him to create limitless resources. Being a terrible criminal, he made it known to the devs and they patched it, but what if he hadn't told them?

Let's say that still a terrible criminal driven by greed, he kept producing resources at no cost at a very fast rate to control the entire game and make it impossible for anyone else to close the gap, would be keep playing and, how long til he was caught?

But, if he was smarter and instead of being obviously greedy he diversified his holdings and the process across a range of accounts that each bumped themselves up slowly using the glitch, how long would he be able to milk the system? People wouldn't suspect foul play as there are accounts (his) that are earning and getting a return and they would feel they are in with a chance. Distributing the process across multiple points lowers the chance of detection while giving many points to extract value from even more points.

Now, back to the printing of money, this is essentially what the banks are doing when they print money through debt creation and interest rates except, we as consumers don't really feel the extent of it as there are many distributed banks and we only have contact with a narrow band of them. Eventually though, the same thing happens as they have traded a token (money) that costs them absolutely nothing to create for what we have, the real. Like @exyle could have done, the game is rigged in their favour because of our greed.

Our greed? Yes. We are as greedy as they are which is why they can offer us something that is valueless and watch as we stack them up like squirrels stacking rocks for the winter, thinking they are acorns. When the time comes to eat however, what we valued so much is inedible because, it is a token that represents what is - except, it no longer does.

Hoarding money itself is a process of futility because that money will eventually devalue or, will no longer be considered tradeable for the things that are valuable. In an extreme example, imagine if you have a million dollars and I have a million dollars worth of canned food and war breaks out. Can your million dollars buy my canned food? No, but you might be able to buy a small portion of it with your house, that gold you have tucked away or, Bitcoin, Steem, Monero...

It doesn't really matter what you offer but it has to be something that is in short supply and others are willing to take it as a token that represents something real. When my father was a child, cigarette packets were traded in war time because, they couldn't be reproduced and were in short supply. Just the empty packet was enough. My father also collected stamps that likely would be pretty valuable now if he had held.

When it comes to tradability and vale it comes down to how reproducible something is. No one would mind owning Da Vinci's Mona Lisa but, how many people will value a poster of the Mona Lisa at the same level? This is where crypto tokenization is going to beat fiat hands down and the ones that are able to control inflation accurately and transparently is very important. 21,000,000 Bitcoin will be mined, past that, what happens?

On Steem, there is an inflation pool that will drop down to 1% inflation per year in about 2035. That means that there is a steady known rate of inflation and therefore can be factored into current and future calculations. It is also why increasing the inflation rate for funding the Steem.DAO is a silly idea unless, it is going to fast-track to getting to that 1% (currently 8.5%) per year. The inflation rate of Steem needs to be trusted. SBD exchange for STEEM value is an issue perhaps.

The problem for fiat is that there is no way to really predict the inflation rate as banks and investment firms in all kinds of ways can affect it in a distributed manner at a global level. The reason it has lasted this long is that for the most part, we are blind to how they do it as we are unable to see the entirety of the network in play. Well, we were blind but technology and information flow is catching up now as we are increasingly better able to track transactions to the point that it will become obvious.

Once it is obvious to the majority of people that @exyle the banks are gaming the system hardcore, do we keep playing? Why would we? Fear of prosecution for not honouring contracts that were made in bad faith? At some point we might have to take the, they can't shoot us all approach and if we do it together, it is done.

However, likely before that happens those who are waking up to the game will start finding other ways to trade. We can already see it happen in the most corrupt and economically broken economies and we see the people trading with Steem. Venezuela is a good example where locals are using crypto currencies to bypass the broken economics of their centralized currency.

The thing with blockchains is that they are not only ledgers that track all transactions, the ones that are carrying currencies should be transparent ledgers. This means that if by some way @exyle does find a way to print more of the resource, it can be detected easily, but it isn't very easy to just print more Steem is it? While it is possible, a whole lot of people have to agree to it and while they agree, it is all publicly available information meaning, no one else needs to stay.

But for a moment, let's consider if I was able to print more Steem on the sly and inject it into the ecosystem through various accounts that invest into all kinds of applications and funds all kinds of development to own. Where does it lead? To resource centralization.

This is where the world is now as we have been convinced to trade our valuable assets for tokens that is in endless supply and can be created by the very people who are buying up our assets. In the end, we have pile of paper, they have everything else. Do you think that at that point, they are going to want any of that paper back?

What will they want for their canned food?

[ a Steem original ]


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