Hi, Steemit. Today we want to present you a long-read article that answers why the story with cryptocurrencies is well overlooked old and what to do with this knowledge. Because, how you may know, forewarned is forearmed.
We hear the word "money" almost every day from others and use it by ourselves gladly (well, not always). However, ask a common person what “money” is and most likely they won't answer this question easily. Because money isn’t only banknotes or coins, it’s something much more. In principle, we can say that “money” is a specific commodity that should have four basic complementary functions. It should be:
- A measure of value
- A medium of circulation
- A means of accumulation
- And a convenient means of payment.
Gold, silver, and Karl Marx
Without going deep into history, when the role of the money had been performed by different shells, plates, copper, etc., the first "real" money was precious metals such as gold and silver. They perfectly coped with all functions mentioned above right up to the First Industrial Revolution in the 18th-19th century. A surge in labor productivity and a shift to the large-commodity production had made obvious the inconvenience of moving and calculating in gold. From that moment good old paper money we all know has appeared on the world arena (not counting China, where they were invented as far back as the 10th century). In truth, this emergence passed barely because functions of saving and accumulation were still reserved for gold.
The second industrial revolution with its conveyors and steam power led to attempts to finally abandon gold and secure for it a role of the "money standard". Everything was, like, it‘s logical. Supporters of this approach were Smith, Ricardo, Mill, Marx, and many other outstanding economists.
Further, theoretical John Keynes claimed that paper money can circulate even without a golden foundation.Surprisingly, he was absolutely right and people supported his idea! The spread of this monetary theory led to the abandonment of the gold standard in 1971. And this, in turn, allowed US dollar to occupy a dominant position in the world and made the American economy the world's largest debtor. Namely, dollars has begun to be printed on demand and a currency backed by nothing has appeared. A familiar situation for a person more or less acquaintance with cryptocurrencies, right?
Call a spade a spade
With the advent of computers, history proves its cyclical nature. The third - and the fourth right after - industrial revolution has begun. The society has started to computerize and the boundaries have gotten blurred. It was evident of usual “money”,needed another shake-up. Contrary to the opposition of states to innovations, as it was once with gold and paper, people returned to the social essence of money again. This is how cryptocurrencies appear.
As well as "real" money, cryptocurrencies meet all four functions:
- The simplicity of circulation is obvious. It takes only a few seconds for transaction to pass all standard mediators.
- Payments in the form of cryptocurrencies are accepted by an increasing number of enterprises and individuals.
- The increasing cost of cryptocurrencies’ issuing determines the measure of its value.
- And all the listed functions allow using cryptocurrencies as a mean of accumulation.
However, like an everything new cryptocurrencies have their own unique problems which, unfortunately, don’t allow the blockchain to break the existing status quo in the financial world. This is facilitated by the lack of a unified standard and unification of disparate projects; regulatory risks that arise here and there in the world; and of course, the high volatility of digital assets, one of the serious shortcomings of Bitcoin and other traditional cryptocurrencies.
While some of these problems are solving by diplomacy, others - by breaking a lance, one ambitious project claimed that they have found a practical solution to the high volatility problem. At least, they say so.
Is crypto-volatility a problem?
Meet the Minexcoin, a global payment system based on the low volatility cryptocurrency. According to Boris Shulyaev, a founder and CEO of the MinexSystems, this altcoin solves the problem of high volatility by automatic regulation of the volume of supply and demand on stock exchanges. How? With a help of a number of algorithms encouraging coin holders to buy, sell or retain their assets, depending on the situationally formed balance of supply and demand. Since these algorithms resemble those of central banks that support the value of the national currencies, they are called MinexBank.
“MinexBank is a kind of synergy between the achievements of the traditional financial system and all advantages of a decentralized approach. - Boris says. - The standalone MinexBank’s algorithm basically uses several finance tools to regulate the volatility of the MNX.
A first tool called “Interventions”. It is standard banking operation when the system throws out or buys coins on stock exchanges in order to maintain balance and control of volatility.
The second tool is “Parking” - voluntary withdrawal of coins from circulation by the user by temporarily freezing them in his wallet. The user that "parked" some of his coins (per day, month or year) receives interest payments. He can independently choose the type of parking, depending on the time period and interest that the system offers him. What's important the funds frozen on the wallet remain in the hands of a user. Such approach contrasts to the depository systems when the funds are transferred to a third party, for example, to banks.
As Boris explained, with the growth rate of MNX the interest rate on parking decreases, while MNX rate falling down all happens vice versa. The main task is to stabilize the rate in the price band no higher than 5% of the closing price of the previous day. Five percent growth is explained by the practice of world stock exchanges. When these values are reached, stock markets stop trading, preventing speculators and disoriented investors from dictating the price. When the boundaries of the 5% corridor are reached, MinexBank either changes interest on "parking" deductions or makes interventions in order to contain the price in the specified corridor,
Only one year has passed since the presentation of the concept to the realization of the finished product. Founders of the MinexSystems has managed to assemble a pro team, conducted an ICO, launched their own blockchain with the support of miners around the world, create, test and release MinexBank with its unique algorithm, and achieve results that you can see on the official website of altcoin.
MNX started its listing on 1 November. While MinexBank algorithm is calibrating itself, the coin shows really good results and interest in it from the crypto community. In short, just in two weeks MNX managed to achieve a 6-fold increase in price, got into the “Biggest Gainers” list on the Coinmarketcap, and so far strengthened at the level of $7 per coin. It should be noted that such a sharp increase in price is following a roadmap of MinexBank Memorandum. Full control over the MNX by the algorithm will be ensured after reaching a price of $20 per coin.
You can find more information in our weekly reports
here https://medium.com/minecoin-blog/report-smooth-week-for-mnx-630b275d8aec
and here https://medium.com/minecoin-blog/mnx-weekly-report-round-two-faf855243a9b