Cryptocurrency is the money of the future and right now there are more than a thousand cryptocurrencies to exist. Many of them have their equivalent in US Dollars. E.g. 1 Bitcoin at the time of writing is worth $ 10.000 and one Ethereum $ 200. <\/p>\n\n\n\n
The price of these cryptocurrencies is\nformed based on supply and demand on the free-market in exchange offices all\naround the world. <\/p>\n\n\n\n
Why do we measure the value of Bitcoins\nand Ethereums in US Dollars? Well because the dollar is currently the\n“stablecoin” of the present.<\/p>\n\n\n\n
US Dollar is the global currency based\non which everything else is measured. The human brain acquires the perception\nof how much something costs based on only one unit of measurement at a given\nmoment.<\/p>\n\n\n\n
Practically, a person can’t use more\nthan one unit of measurement at the same time when comparing the value of goods\nand services. For example, a cell-phone costs $ 1000, one liter of milk costs $\n1, a hamburger costs $ 5, etc.<\/p>\n\n\n\n
We value new merchandise or service by\ncomparison with already known values.<\/p>\n\n\n\n
E.g. We read that back massage costs $\n200 and we concluded that this service is too expensive because we can buy 200\nliters of milk for 1 massage, which doesn’t make much sense.<\/p>\n\n\n\n
For this kind of inference process,we\nneed a stable component that does not change value at all, or at least for a\nvery long time, which is the US dollar at the moment.<\/p>\n\n\n\n
Try, in your head, to use two units of\nmeasurement (e.g. euro and dollar) and you will quickly see that the process\ndescribed above is impossible and that your brain will choose one of the units\nof measurement no matter how intelligent you are.<\/p>\n\n\n\n
If we live in Europe, our brain will use\nthe euro as a constant because it does not change its value as rashly as the\ndollar does. However, if we live in a country with high inflation where the\ncurrency is not constant, we start to use another currency as something stable\nso that we can measure the value of goods and services.<\/p>\n\n\n\n
We can take Venezuela as an example\nwhere the locals have discarded their currency and use the US dollar as a unit\nof value.<\/p>\n\n\n\n
As another example, we can take a trip\nabroad.<\/p>\n\n\n\n
You have noticed that you always convert\nthe price of goods into a known currency so that your brain can assess whether\nthe price is practical or not (expensive or cheap).<\/p>\n\n\n\n
From the above mentioned it can be\nconcluded that to use some currency as money for daily payments and comparisons\nof value, that currency needs to be:<\/p>\n\n\n\n
1. “STABLECOIN”<\/p>\n\n\n\n
2. \nA UNIT OF MEASUREMENT<\/p>\n\n\n\n
No matter what currency we use, our\nbrain imposes this rule on us and it must be obeyed when we want some currency\nto be used for everyday payments.<\/p>\n\n\n\n
We come to the conclusion that the\ncurrency must be one and must have its geographical representation.<\/p>\n\n\n\n
This again shows that only one\ncryptocurrency can be the money of the future at the global level or we can\nhave more cryptocurrencies but one in each country. This doesn’t mean that\nother cryptocurrencies and currencies won’t have value, they just won’t be used\nas money for everyday payments.<\/p>\n\n\n\n
Bitcoin, Ethereum and other\ncryptocurrencies handle many of the limitations and disadvantages of current\ncurrencies. They also bring us freedom and reduce the possibility of\nmanipulation which is great, but still, they are not used as currencies, why?<\/p>\n\n\n\n
We said that our brain needs\n“Stablecoin”.<\/p>\n\n\n\n
Then how Bitcoin can become\n“Stablecoin”? We have around 21 million Bitcoins in circulation and\nthat number is fixed which is good because it prevents manipulation and\nprinting of money. The only way to make bitcoin stablecoin is to start using it\nin a specific geographic region or worldwide. Only then would its value,\nconcerning other goods, establish itself and bitcoin would become a currency\nthat is “Stablecoin”.<\/p>\n\n\n\n
The “problem” is that the\nprice of 1 bitcoin, in that case, would be in the billions of dollars and it\nwould not be used as a currency until it reached its final price. Here we come\nto the fact that Bitcoin is not yet a currency but an investment for the future.\n(Store of value, HODL\u2026)<\/p>\n\n\n\n
There is another problem with\ncurrencies, which is related to commission per transaction.<\/p>\n\n\n\n
Fees per transaction, no matter how low,\nare unacceptable to users. Here again, we come to our brain and psychology that\ndoes not want anyone or anything (blockchain) to take away our value while\npaying. The problem has been seen with payment cards of the present that did\nnot start to be used massively until the commission per transaction was\ncompletely removed or drowned into the price of the product disabling our\nbrains to recognize them. This means the currency of the future must also\nfulfill this condition.<\/p>\n\n\n\n
Bitcoin solves this problem with the\nBitcoin Lightning Network, which uses payment channels, so it is possible to\ncreate a system that does not pay fees per transaction but for example monthly,\nquarterly, which is acceptable for the end-user,seeing as we still pay this fee\nto banks today.When it comes to bitcoin, we are left waiting for the Lightning\nnetwork to evolve and for the mass adoption\/use of bitcoins. The Lightning\nnetwork also solves the problem of transaction speed and the number of\ntransactions per second.<\/p>\n\n\n\n
Another competitor for\n“Stablecoin” and the currency of the future is Dai decentralized\nstablecoin. It’s the currency which regulates the number of coins in\ncirculation by itself and its stability is related to today’s dollar. Dai token\nwas created on the Ethereum network and it entails a commission-by-transaction\nproblem. Dai stablecoin is being used more and more every day and would be used\nas money already if there were no commission per transaction as well as a limit\non the number of transactions per second. Both of these problems should be\naddressed by enhancing the ethereum protocol itself, which should take place\nover a minimum of one year.<\/p>\n\n\n\n
Ethereum is a platform, a global\ncomputer and Ethereum itself, as a cryptocurrency, will not become money for\neveryday payments, but that wasn’t its goal in the first place. Ethereum will\nhave its value that may even exceed the price of bitcoin, but it will not be\nused for payments.<\/p>\n\n\n\n
Because Ethereum is, as we said, a\nplatform for making other currencies, financial derivatives, smart contracts\nand entire banking systems like DAI (Maker-Dao).<\/p>\n\n\n\n
In the years to come, the Ethereum\nplatform will only be upgraded to gain in bandwidth, capacity, and speed.<\/p>\n\n\n\n
You have noticed that large corporations\nare entering the world of cryptocurrency by mentioning stablecoin (Facebook, JP\nMorgan, and others), which is no accident. They know the psychology of average\npeople better than blockchain experts who are top mathematicians and\nvisionaries, but these same experts ignore the need of the average user.<\/p>\n\n\n\n
I can say that Vitalik Buterin was wrong\nwhen he said that the Stablecoins are not that important. They are paramount to\nthe success of blockchain, because as an end-user, I want to know exactly how\nmuch something costs me, and for that I need a constant, which is Stablecoin.<\/p>\n\n\n\n
The stability of today’s currencies is\ngoverned by the world economy and central banks that print or withdraw money\nfrom circulation and should thus make it stable. However, central banks often\nabuse this power given to them, so recessions and other problems often occur.\nThe values of the currencies we use today have been quietly and slowly halved\nin the last 50 years, so they are not really a Stablecoin, but our brains\nhaven’t noticed that yet.<\/p>\n\n\n\n
When the economic crisis comes and our\nbrains realize that today’s currencies are not stable, a race for the new\n“Stablecoin” will start.<\/p>\n\n\n\n
“Show must go on”<\/p>\n","protected":false},"excerpt":{"rendered":"
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