Quoth the Raven has it right in this post
The Social Costs of Inflation need to be addressed.
The world of cryptocurrency developers and the models they build need to change to fix these costs.
QE Quantitative Easing coupled with the Cantillon Effect is the Root cause of Inflation and the continued erosion of buying power which reduces one's chances of ever prospering in the current economy
So What Should Crypto Developers Do to 'Cap Inflation'?
First though, the problem statement: Defining the Root Cause of 'The Social Costs of Inflation'
The root cause of all Inflation?
Quantitative Easing aka Govt Fiat Currency Printing and the Rapid Growth of US $ fiat currency supply size, designed by the USA govt Administration and the Federal Reserve Board to keep their customers, really large insolvent banks (and their customers smaller regional banks) solvent, continuing the business of making more money through both short and long term debt issuance which eats your buying power more each day as that fiat currency supply grows, driving up the cost of everything.
Your cryptocurrency project is a fiat sponge, expanding during QE, and just as easily contracting to flow into other fiat repositories automatically, te value of which is printed out of thin air, or declared as a token ceiling limit. Sure the rate at which these tokens are released has inflation controls. Big deal. The released tokens still erode your buying power, big time.
Just to be clear currencies are not money, they are simply mediums of exchange. In the case of the US Dollar, it is a note that is a promise to pay you the denominated amount on that note in Fiat, either replacing the note with new serialized version of the note, or paying you five twenties for a 100 note, etc. These notes are backed up by a promise to pay the value of the note.
Money is historically a real world asset value linked to physical assets and the work that created them. Gold is money, with labor costs associated to it for pulling it out of the ground sizing it/minting it added in.
Money can also be digital linked or tethered to those same real world assets.
Money(gold) backs all currencies today when it comes to International balancing of accounts. That Money backing the settlement between different nation state balances, uses currency unit of measurement to settle such accounts.
Fiat currencies are exchanged to acquire assets valued in that fiat denomination like the computer I am writing this post on.
The Fiat value denomination of the computer is locked in the computer at the moment, depreciating in value every day for tax purposes.
The Observation and Epiphany:
Digital Money is full reserve backed by Real World Assets
What if the fiat value of this computer could be made liquid, represented as a cryptomoney token, with no inflationary attributes and be re-valued as cryptomoney in some unit of account, US dollars which also accounts for the utility value provided by the computer?
Turns out, all of that is possible by simply employing the tools we have to create a digital form of money backed by the US denominated value of the computer and the utility it provides to the user of the computer and the network to which it is attached.
Solution? Add Dynamic Just in Time Liquidity to full reserve RWA Backed Cryptomoney to 'Cap Inflation."
How?
Convert your cryptocurrency project into to a Distributed Microbank Network of Nodes, backed by Full Reserve Real World Assets and Dynamic JIT Liquidity
and leave the old central banking systems of printing fiat 'willy nilly', behind.
To what one might ask?
I am not talking about using Barter and Silver Money as the Medium of Exchange.
Besides barter is technically illegal in the USA and #Silver is a centrally controlled and price manipulated real world asset
#BTC Bitcoin is no better, as is anything ETH ERC-20 as both are simply fiat currency sponges easily price manipulated by automated centrally controlled bank trading systems. Same goes for Stablecoins.
ERC-721 on the other hand, does offer some functionality to enable the Microbank minting of cryptomoney, if it is securely (Q-day protected) connected to full reserve #RWA real world assets, and is tethered to support term liquidity to one or more requesting sources of liquidity, which in our case would be automated Smart Contract asks looking to back up it's DEFI product offering, or back the settlement of transactions between the buyer and the seller.
The problem is deeper though,
in that, the current world of staking fiat in cryptocurrency form behind such DEFI offers or settlement functions sees the cryptosphere makes use of a less than dynamic TLV Total Locked Value method which is anything but dynamically liquid (and not Q-Day secure), and,
where algorithmic control of the price of these #TLV states are manipulated by traders, it is constantly experiencing a change in price affected by automated buy/sell positions both current and future to (somewhat collectively) designed by traders to move the price of any TVL crypto in any direction they please to maximize profits, by the minute, if they so chose, with first mover advantage measured in seconds. In fact the TVL can be in practice driven to zero, when the competing algorithms head in that same direction,selling off more than they are buying, creating a buyers market, where there might not be that many buyers in sight.
That said, there is a way to use existing FOSS tools as a cryptocurrency developer to actually cap inflation and the fiat money expansionist policies driven by central governments and central banks where ERC-721 fits nicely into the minting process of cryptomoney. Read on.
Retrofitted Cryptocurrencies backed by 'Full Reserve' RWA Real World Asset Tokens with Full Reserve Dynamic Liquidity:
A First Node Operator Microbank Step
By using today's FOSS Free Open Source Software tools available on Github, #Codeberg et al
A clever cryptocurrency developer could take their existing fiat cryptocurrency project and convert it to support Dynamic JIT 'Just in Time Liquidity' under full reserve RWA 'Real World Asset' backed issuer(Node Operator) personalized term controls.
Multiple converted cryptocurrency projects in the above manner could operate in concert as multiple central bank replacements.
Who would not want to interact with Q-Day secure crypto-currency which has full reserve cryptomoney backing?
The combination of Full Reserve RWA backed Cryptomoney coupled with Dynamic 'Just in Time" Liquidity and *Not clunky inefficient liquidity starving Total Value Locked) essentially creates a Digital Interstate Network of Interconnected 'Bankless Peer to Peer Buy/sell/Barter/Trade mediums of exchange, each with multiple interconnected Price Discovery Exchanges/Oracles (#Chainlink anyone ?) everyone can see to set their prices and terms supporting their buy/sell offer, DEFI loan and barter engagements.
Converting your Cryptocurrency Project to be 'JIT Liquid' and RWA FULL RESERVE Backed to CAP FIAT Inflation:
Converting Node Operators into Microbanks.
To convert existing fractional-reserve backed fiat cryptocurrency mediums of exchange (really fiat sponges) to be backed by full reserve money, dynamic #JIT Liquidity ‘term staking’ must be used to be the underwriting/collateralization mechanism to real world asset 'full reserve' back the settlement transactions offered by the consensus mechanism which needs itself to be altered to support JIT liquidity, so the Smart Contract DEFI term loans issued per the terms of the liquidity issuer are JIT backed by RWA tokens issued by the Node Operator, the Microbank lender of liquidity.
JIT Liquidity is therefore Node Operator 'term locked' using Operator defined 'Whitelists' where terms are set when issuing liquidity to one or more cryptocurrency Smart Contract controlled DEFI services asking for liquidity (quote mechanism) to make their service more attractive with lower cost of borrowing that is also trusted with PQC 'Post Quantum Cryptography '#Q-Day protected' and also backed by Full Reserve RWA Tokens.
That means the Node Operator decides which cryptocurrency Smart Contract #DEFI services they wish to back as a dynamic lender of liquidity, where the Smart Contract accepting the liquidity is also agreeing to pay a fee for use of the liquidity, backed by some form of RWA.
Making The Node Operator a #Microbank.
Making the Network the RWA Cryptomoney when that Real World Asset Token is minted by the Node Operator on that computer, where the minting value in ERC-721 is based on the value of the computer node hardware and the utility provided given the stated purpose of the computer systems, which in the case of this post, the networking is storing private data chunks which are PQC Q-day protected.
JIT Liquidity + Full Reserve RWA: The Answer to Capping Inflation
'Just in Time Liquidity' staking of digitally secured Real World Assets (Gold, Silver,loan free real property and cars, Computer and Network Equipment for example) fixes the root cause of Inflation by converting/capping the growth/QE inflation of the fiat money supply
creating a free flowing, efficient JIT dynamic liquidity ocean 'DLO', no longer needing any more minting of crap fiat currency to occur, because the underwriting token minted by the Node operator is based on the depreciated value of the equipment factor multiplied by it's ability to do the primary use case prescribed work, the Node Operator system's utility provided to the network, thereby stopping QE driven inflation,
The 'twist' to JIT liquidity is how the SC ask for term liquidity is serviced. Suffice it to say the ERC721 token is first backing a quote to the SC at some interest rate, effectively made divisible to support the issue of multiple mobile CASH Certificates which are available for the same or different terms set depending on which SC is asking, meaning all or part of the ERC-721 token will be locked during the loan of liquidity state and as the terms complete, the liquidity is released back to the Node Operator System which minted the ERC-721 (Serial#+GUID ID uniqueness), and the previously issued mobile cash certificate is then burned at term's end, and all or a portion of the Node Operator Systems minted ERC-721 value is unlocked, ready to have its value issued as liquidity again and again, each time earning interest in an amount determined by the terms of that liquidity loan to the SC, which implies the terms could have any number of conditions attached in the quote which the SC must analyse before accepting the liquidity for the length of the term.
Lots of fun, lots of possibilities to differentiate/limit liquidity offers, all of which are up to the Node Operator, which may be set differently per type of Node System.
Yes the new Microbank can become very diverse it its offering of liquidity with many different terms.
Node Operators: The New Micro Banks- Become your Own Full Reserve JIT Liquidity Micro Bank
In effect, by deploying JIT Liquidity backed by Full Reserve Real World Assets,
Node Operator's become a network of distributed Micro Banks, able to under their own terms, dynamically stake a portion or all of their Full Reserve Real World Asset System value and utility per their own terms, not some Centralized set of Banker Terms.
DLO and FRECH Token Whitepaper: Free to Download, Digest and Act on, No Licensing Required.
A Useful Conversion Reference to help developers grasp the Concept of Capping Inflation in their Cryptocurrency Project
One such ‘retrofit/convert’ of existing fiat cryptocurrencies be backed with full reserve RWA Real World Assets and JIT Just-in-Time Liquidity is called #DLO “Dynamic Liquidity Ocean” and #FRECH “Full Reserve Enabled Crypto-money Hardware” Token is posited here in detail, for the software technically inclined. (Free to view and download)
This Whitepaper can be viewed and downloaded and used by the cryptocurrency project developer as a reference when converting such existing fiat money supply expanding cryptocurrency projects to cap the growth of the fiat money supply in their project and convert to a Full RWA Reserved backed Dynamic JIT Liquidity enabled medium of exchange.
The DLO and FRECH Token concept of implementing Full Reserved RWA Backed Tokens make use of ERC-721 minted from Network Equipment using a PoRV Proof of Resource Value calculation to control minting which uses the Autonomi Network as the baseline for determining utility portion of the value. The utility portion of the value in the calculation is where crypto developers can take poetic license to change it to better match their own existing cryptocurrency's utility value. The starting value of the Network Hardware is determined by third party Oracles like Chainlink, then adjusted to the depreciated value of the network node hardware as allowed by the nation state in which the node is located.
So yeah there is 'stuff to work out' , as success is always in the details, as is the differentiated value of your cryptocurrency project.
Do developers have to dive into the details on how DLO and FRECH might fit into their projects?
Absolutely!
There is no Ready Made ' Cap inflation' Solution served up to crypto developers on a Silver Platter. So get over it!
That said, this paper is a good place to start thinking about how one caps inflation in their own project and turns Node Operators into their own Microbank. (see links below as well)
Q-Day is Coming, so plan to be ready for 2029 Arrival, not 2030.
Tip: developers will need more than NIST FIPS Q-Day Protection in the medium term, as Q-Day will show up and crack BTC and ETH wallets by 2029
(More on this and what to do about giving your cryptocurrency project real 100% guaranteed Q-Day Decryption protection in follow up posts)
Is your cryptocurrency project a high value target?
Likely, given Quantum Computers purchased for less than US $5 M will have the Multi Qubit Entangled Power using SHORs by then to decrypt your NIST FEPs standard in 6 months, if there is a lot of value sitting on your blockchain. (If you believe the vendors telling us they have so much power today, where imo they are telling 1/2 truths.)
Qubit power is doubling every 6 months, so figure it out and
get going on this part now as well!
Fiat Cryptocurrency Developer Call to Action?
First ask yourself one question?
Do you still really believe in the ethos of the cypherpunk movement and want to revive it?
Well then, regarding the above concepts, read the two links below, get your conversion plan designed asap and,
Just do it. ;)
Why?
The preservation of your buying power (everyone's buying power for that matter) and your future prosperity depends on you doing it.
Cap inflation fast and truly become prosperous. Make Microbanks the norm. Make your Node Operators rich in the process.
The cryptosphere has the power and the brain trust to make this happen.
TK over and out. :)
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