You are envisioning a future where there will be many different currencies competing within each other, trying to target a specific need or market of the segment. As cryptocurrencies, they will still have some sort of monetary policy built into the protocol, right? What will be the link between monetary policy of these protocols, and the needs of the people?
That is a really interesting question. I think the monetary policy is one of those genetic traits that is focused on the environment in which a currency or token competes.
I’ll take a slight detour on this, because a lot of people ask me if Ethereum competes against Bitcoin. I think they do not compete. Each one has traits that are focused on very specific goals.
Bitcoin has a monetary policy “trait” that makes it more suited towards the niche of a reserve currency, global trading standard, and point of reference for medium-of-exchange and things like that. Obviously, Ethereum is much more focused on maintaining state within contracts in order to enable smart contracts.
These are differences such as those between a shark versus a human. A shark has skin that allows it to glide through the water, while humans have feet that allow us to walk upright. Do we compete against sharks? Well, if I go into the ocean, I might try to compete against a shark, and I will lose; in contrast, if I took a shark into a boxing ring on land, I would win.
Our domains are entirely separate. The traits that make us top successful predators among other competing species within one environment… will automatically select us out of other environments. There are no universally successful species. Species are specialists.
Monetary policy is one of the critical characteristics that determine where currency fits within a niche. It is what defines Bitcoin. Bitcoin is a brand, but what bitcoin is, fundamentally is decentralized, limited issuance system. If it is not limited to 21 million coins, it is not Bitcoin. You can say that is part of its birth certificate. That is what defines it. Many of the other features can change, but not that.
Ethereum is about smart contracts. Many other features can also change about it, including its monetary policy, but not the smart contracts.
Yes, I think we should really look at monetary policy as one of important characteristics. We should also look at the degree of decentralization, as well as the flexibility versus the security and conservatism of the scripting language.
That is how we decide where a given cryptocurrency fits. However, where you think it fits, isn’t necessarily where it will actually fit. No matter what you do as someone who is involved in this space, you don’t defy its future or the potential evolution of this thing.
It is moving along, society is moving along at the same time, and everything is changing around it. It will fit where it fits. We have yet to discover exactly where that will be. Part of the big debate we are having with Bitcoin and other cryptocurrencies is about where they actually fit. You can express an opinion about that, but you cannot direct them, at least not in a predictable fashion where it is going to fit.
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