Those who question the future of crypto-assets do not really understand the monetary system. Even those who you would think know about it have no idea. The reality is that few ever look into it. Hence, they believe they grasp what is taking place yet do not.
To most, it is rather unimportant. As long as it works, this is all that matters. After know, few truly know how their laptop works. If it turns on when the button is pushed, that is the extent of it.
The same is true with most innovations. There are a number of people who know how automobiles operate. For the majority of us, it is put the key in and away we go.
Money is no different. People take for granted what actually occurs with each transaction.
In this article we will uncover it a bit and reveal why blockchain is the future. We also delve into why this is good news for Hive.
The Global Monetary System
We no longer live in a world where Brinks truck full of cash dispatched to settle transactions. At the same time, bars of gold are not sent by horse and carraige when loans are made to waring kingdoms.
Instead, our system is partial shown by the image above.
Have you ever considered how someone from Britain can go to Mexico, pull pesos out of the ATM, and what takes place? Does the bank in the UK send banknotes to settle? Not even close. Even if it wanted to, the bank in Mexico likesly does not want pounds. Of course, it is highly unlikely the bank in England is sitting on a ton of pesos.
Instead, we have this elaborate system that was set up by the banks which control the flow of money. This is, quite frankly, the reserve currency. Forget the nonsense the Federal Reserve spews. Here is the real system.
When that transaction is initiated in Mexico, it ets of a string of events that involved a large number of entities. We have exchanges, central banks, messenger services, banks, money market funds, repo, and a host of other institutions. There are master trusts which sell commercial paper providing them with the "dollars" to facilitate all this.
In short, we get a convolute mess. Welcome to the world of ledger based money.
This was constructed over the past 75 years and it is an elaborate system. It is also revealing as to how things operate.
We are dealing with digital transactions. These circle the planet in milliseconds. The ascent of money is tied to telecommunications for a reason.
There are satellites as well as underwater cables. Networks of servers are fired up, passing data along throughout the day. Everyone can "talk" to each other, allowing money to get where it is needed.
This is what crypto is looking at replacing.
Networks And Banks
In the world today, banks are the gatekeepers of money. Certainly, we now there is no physical currency involved. We are dealing with digital assets, something that was a reality for a long time.
Robert Rossa, ex of the Fed, recognized this back in the 1970s. He said there was a "new network of interbank relations". This is exactly what we see here. We have an interconnectivity of all these financial institutions, all adding a piece to the puzzle.
In short, we are dealing with network on top of network, on top of still more networks.
What is the monetary system? It is the combination of account, i.e ledgers, and communication networks which are digital in this era.
To be the solution, this is what is required.
The first point is that we are not far away from the concept with crypto-assets. This is ledger based money, something we have used for decades. We can see how the system is geared up for it.
At the same time, we are light years away from this. Here we see the true nature of the problem. To replace the global reserve currency, we have to be able to provide all that it provides. This requires the networks being able to offer the same solutions.
Here is where the gap lies. We need to intermediate to all parts of the world, in all manners. It is where building takes time.
Our present forms of money is nothing more than ledgers controlled by a cartel we know as banks. They operate this virtual ledger currency system, being the proud gatekeepers. It is a fact that is wonderful for them, not so much for humanity.
With crypto-assets, we can reverse the equation. We, too, are dealing with virtual currencies. The main difference is in the maintenance and control of the ledger. Blockchain handles this for us. That mess shown above can be simplified by stacking a few different networks on top of each other.
Hive's Part In This
We are now to the point in the discussion where technical specifications are vital. In other words, you best be in it for the technology because this is the essence of what we are talking about.
Money is computing. It is nothing more than data being shifted and stored around the world. The question then becomes who can do it better.
For maximalists, this would be "my network is better than your network".
Of course, we see this with bitcoin. That network is not very advanced. For that reason, developers decided to build the Lightning Network.
Do you see a pattern here? Network on top of network.
This is the future because it is the present. It is how money in the 21st century works. Actually, this was the reality for a large portion of the 20th century also. This is what fed into the massive economic growth globally.
Crypto-assets do two things:
- simply the networks interconnectivity by reducing the number of intermediaries involved
- change who is responsible for the ledger
Hive is simply a much better network that most of what is out there. It is the key advantage. When dealing with something like the Hive Backed Dollar (HBD), people want to focus upon the asset itself. Instead, the network is the most crucial element. Which leads us to focusing upon the other networks tied to it.
This is the process we have to undertake. While everyone is looking at what is on top, it is the underlying architecture which is most crucial. Assets of all kinds will be created. That is not the question. Innovation and experimentation will occur at that level. However, if it is running on a bunch of 486 pcs, we are not going to have a very viable system.
Efforts are underway to keep advancing the capabilities of Hive. Understanding the foundation of all this, something few in the world really look into, makes clear how misguided some of the common notions are.
People seem to think a government (or group of them) can simply state we are going to use a different form of money, flip a switch, and it is so.
Look at the image again. What are all those networks designed for?
In short, that is what requires replacing. It is a mammoth task and something that those involved in crypto are attacking.
Development is key.