I am paraphrasing the epic James Carville line since it really drives home the point of this article.
We hear a lot about stablecoins, Libra, and the Chinese token. Some central bankers are starting to come out in favor of tokens put out by them. Many point to how these will be better than the fiat system we have.
There is an interesting project that I came across which a designed along these same lines. It is a cryptocurrency that is meant to replace the United States Dollar. Thus, for every dollar in the world, it will be exchanged for this token.
The developer's point in creating it is the fact that he views Bitcoin is a form of a ponzi scheme. The early adopters are the ones who are going to benefit the most since they are the major holders of the token. Thus, even thought Bitcoin is "better money" than fiat, it still does not solve the problem.
Many of these projects take advantage of blockchain properties. Blockchain provides immutability, transparency, and is censorship resistant. Any project that is decentralized will have these aspects on it. Thus, for financial transactions, it is a much better system as compared to what we are operating under.
There is one problem with all of this which the last project epitomizes.
Even if we replace each dollar with this token, it is not an improvement. Sure, it will remove friction from the equation while providing trust. These are steps in the right direction.
There still is a major challenge with this and that is the fact that the money will be in the same hands. If the developer thinks that Bitcoin is an issue because of who will benefit, he ought to look at who is holding dollars right now. I can assure you, it is not the average person who is going to benefit.
Which brings up the Carville line.
"Its the distribution stupid."
The biggest advantage to cryptocurrency is the way it can be distributed. No longer are we forced to embrace a system where there are only a few ways to accumulate money. With cryptocurrency, people are finding there are dozens of ways to get rewarded.
Hence, we see the biggest difference maker between cryptourrency and fiat money. Replacing fiat with digital embraces a few of the properties of crypto yet still lags in the area that needs to be addressed the most.
Income and wealth inequality are getting the headlines today. Embracing the present system with a digital version does not offer the outlet people need. Overall, there are only a small handful of people who are succeeding under the present system. Most are screwed from the time they are born. Why is this? Unfortunately for most, it is something as simple as where they were born.
The BAT token is a prime example of how basic this method is. I just checked my account, and with a little more than a week to go, my rewards for the month total almost 10 BAT. At the present price, this is worth about $2.25. Since it took 186 ads to attain this, I am making a bit more than a penny. Not bad for clicking a button to open a new tab on my browser.
Am I going to get rich off BAT? Of course not. Where I live, a couple bucks does not mean much. I will say that it is a different story in Haiti or Laos. There, a few bucks goes a lot further.
Where the difference comes in is the fact that I can do dozens of things like BAT, some providing much bigger rewards. The key here is so can everyone. Nobody is excluded from this as long as he or she has the ability to get online.
Thus, it is easy to see how we are just not replacing the money that is used. Instead, we are replacing the entire economic system with a new one that provides people with more ways to be compensated. That is the true value of cryptocurrency and why we must keep embracing the decentalized platforms. Development on them is crucial.
Each time I hear of a new proposal to replace fiat with a digital alternative, I see the same wall being run into. Ultimately, all these tokens will simply favor those who are already in power. The few who have a lot of money will benefit even more from a digital version of their currency. Yet, for the 97% (or whatever it is) who are on the short end of the stick, nothing changes.
Cryptocurrency is making a difference in people's lives. Income is the first step which then can lead to wealth. As people start to accumulate more, they are able to invest in projects they are optimistic about. This is why it is so important to get tokens in the hands of people across the globe. As wallets start to fill up, people then have options. This is in sharp contrast to today where people have few options. For many, even the choice of paying the electric bill is not there since they lack the money.
Looking at BAT again, what if the token became 5 times as valuable when more people start to utilize it. We know that the network effect is behind all these tokens, so if there is a large adoption, we should see higher value.
If the token is worth $11 instead of $2.25, then we are talking a different situation. Now, in some parts of the world, that amount is making a difference. Also, if this is coupled with 20 other projects that also provide rewards, now there is a bit of money flowing in.
This will not happen if we simply tokenize the existing fiat. The present system will just be replicated in digital form. Sure, transparency might stop some of the game but that is not likely since the actions of the elite of obvious. Even if everyone knows about it, if you are so powerful nobody arrests you, is it really a crime? That is the world we live in today.
Thus, we are much better off replacing the existing system with one that offers a better reward system. Continued distribution is vital. The great part of this is that there will always be opportunities to be early adopters. Innovation does not stop meaning new projects will be cropping on continually.
Each of us will have the chance to get into things in the earliest of stages.
To me, this is a much better economic system as compared to what we are dealing with now.
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