4 ms·

Honestly would like to know how you see it would "get there". In my mind, the 'fiat' part of 'fiat currency' and government-coupling are what gives the financia

by gota 6y ago

Honestly would like to know how you see it would "get there". In my mind, the 'fiat' part of 'fiat currency' and government-coupling are what gives the financial system the safeguards, so...? I mean, it is always the state, if you follow the string to the end, that oversees and enforce compensation, rollback and error correction. What kind of fully-distributed non-autoritative algorithm can do that?

derefr 6y ago
You can build a fiat currency system on top of crypto-holding smart contracts just as well as you can build one on top of gold-holding (or T-bond-holding) banks. The main difference between cryptocurrency and regular currency comes down to interoperability. The infrastructure that handles fiat cryptocurrencies could be built generically, such that a given "bank account" could hold a mix of fiat crypto-tokens, each associated with a given regulatory regime that would validate actions taken upon those tokens. With regular fiat currency, the currency is effectively a fiction local to a given regulatory regime; but that fiction can also take on other lives as other fictions, if "re-used" in other regimes. (I.e., some other country can use US dollars as "their" currency, with their own rules about how you can spend/exchange those US dollars while you're there.) Effectively, the value of the currency in each economy is independent, a separate fiat declaration of value by the economy that trades in the currency. And, if you want to "translate" the value of that currency into a different regulatory regime that doesn't "share" in the fiction of that currency, you (or the bank you're interacting with) must exchange it through a ForEx broker (which effectively recycles the source currency back into the regulatory regime it comes from) to attain a different fiat currency regulated by the destination regime. Cryptocurrency skips all that. You don't need ForEx. Anyone from anywhere can hold anything. It's less like current fiat, and more like commodities trading with each fiat currency being a country-unique export (e.g. an elemental metal only found there) traded on, and valued by, the global market as a whole. And yet, if someone were holding a hypothetical government-regulated USD token, every interaction that person does with that token would be done with under regulatory validation of the US government. There wouldn't be separate fictions of "the US dollar" in each economy it trades in (as happens in e.g. Venezuela); instead, it'd be more like everyone in Venezuela buying and selling everything by having implicit US bank accounts owned by proxy US citizens beholden to US law, and doing transfers between those accounts. Of course, at any point you could "cash out" of the fiat currency by exchanging it for some non-regulated token (if the regulatory regime that controls the regulated fiat token allows that exchange to happen.) Just like you can take cash out of a bank, and walk away. (Or more precisely, just like you can buy a non-controlled commodity like gold or oil using your chequing-account balance, and then walk away with the commodity.)

by gota 6y ago

derefr 6y ago

You can build a fiat currency system on top of crypto-holding smart contracts just as well as you can build one on top of gold-holding (or T-bond-holding) banks. The main difference between cryptocurrency and regular currency comes down to interoperability. The infrastructure that handles fiat cryptocurrencies could be built generically, such that a given "bank account" could hold a mix of fiat crypto-tokens, each associated with a given regulatory regime that would validate actions taken upon those tokens. With regular fiat currency, the currency is effectively a fiction local to a given regulatory regime; but that fiction can also take on other lives as other fictions, if "re-used" in other regimes. (I.e., some other country can use US dollars as "their" currency, with their own rules about how you can spend/exchange those US dollars while you're there.) Effectively, the value of the currency in each economy is independent, a separate fiat declaration of value by the economy that trades in the currency. And, if you want to "translate" the value of that currency into a different regulatory regime that doesn't "share" in the fiction of that currency, you (or the bank you're interacting with) must exchange it through a ForEx broker (which effectively recycles the source currency back into the regulatory regime it comes from) to attain a different fiat currency regulated by the destination regime. Cryptocurrency skips all that. You don't need ForEx. Anyone from anywhere can hold anything. It's less like current fiat, and more like commodities trading with each fiat currency being a country-unique export (e.g. an elemental metal only found there) traded on, and valued by, the global market as a whole. And yet, if someone were holding a hypothetical government-regulated USD token, every interaction that person does with that token would be done with under regulatory validation of the US government. There wouldn't be separate fictions of "the US dollar" in each economy it trades in (as happens in e.g. Venezuela); instead, it'd be more like everyone in Venezuela buying and selling everything by having implicit US bank accounts owned by proxy US citizens beholden to US law, and doing transfers between those accounts. Of course, at any point you could "cash out" of the fiat currency by exchanging it for some non-regulated token (if the regulatory regime that controls the regulated fiat token allows that exchange to happen.) Just like you can take cash out of a bank, and walk away. (Or more precisely, just like you can buy a non-controlled commodity like gold or oil using your chequing-account balance, and then walk away with the commodity.)