Sirwin
Sirwin

The Truth They Don't Want You To Know: How Governments Are Destroying Your Savings


What is cryptocurrency and blockchain technology? In simple terms, cryptocurrency is digital money that exists on a decentralized, peer-to-peer network. There is no central authority that controls or issues the currency - it is governed by code and cryptography. Blockchain refers to the underlying technology that enables cryptocurrency to operate in this decentralized way. It is a distributed digital ledger or record of transactions that is duplicated and shared across the entire network.

This decentralized structure is important for a few key reasons. First, it means there is no single point of failure - if one computer or entity goes down, the network as a whole continues operating. Second, it removes the need for centralized intermediaries like banks - users can transact directly with each other. And third, it provides transparency since the record of all transactions is publicly viewable on the blockchain.

So what does that have to do with Government?

By removing central control and intermediaries, cryptocurrency and blockchain offer a solution to issues with traditional centralized systems. For example, censorship resistance in that no one entity can block transactions. Improved transparency since all activity is on a public ledger. And global accessibility by enabling anyone with an internet connection to participate regardless of location. Cryptocurrency is the proof of concept that has now clearly demonstrated the capabilities of blockchain protocols.

649da1a00257ae338b27c46f35f11d4f.png The resistance is here.

Overall, these technologies have the potential for positive disruption by decentralizing trust, democratizing access, and optimizing existing systems. The thesis of this essay will be to explore these opportunities further while also analysing challenges and considering how cryptocurrency and blockchain may evolve in the future.

The Rising Tide: Government Debt and Our Monetary Future

Why wont crypto die?

Over recent decades, government debt levels across major economies have steadily increased. In the United States for example, the national debt now exceeds $34.6 trillion according to US Treasury data. This growing debt burden is in large part due to increased spending on programs and services, combined with periodic tax cuts that reduce revenue.

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To help manage higher debt loads, central banks have employed loose monetary policies including quantitative easing programs. Through large-scale asset purchases, this "money printing" as it's commonly known, has helped lower borrowing costs for governments. However, it also has unintended impacts on savers and the value of fiat currencies over the long run. The impact is broadly measured in inflation.

21e4c82b82971f228c44f295947e977c.png source: truflation.com

When interest rates charged to governments are kept artificially below the rate of inflation, this creates negative "real yields" for bondholders. In other words, the returns received do not compensate for the loss of purchasing power over time. This punishes prudent savers while rewarding debtors. It also distorts signals in financial markets and misallocates capital.

For individuals seeking to preserve their wealth, alternative stores of value beyond bonds and cash are needed. This is where cryptocurrencies like Bitcoin and Ethereum offer a compelling option. As decentralized digital assets with hard capped or consensus driven supply, their long-term prospects are based on market forces rather than political decisions. By opting out of inflationary currencies, holders can potentially shield themselves from monetary policies that erode savings.

e39a120d37d2e87b1a5050e6200d9a9e.png This is why you feel poor.

Of course, cryptocurrencies are not without risks either. Significant volatility means they may not be suitable for short-term needs or those averse to large price fluctuation. Jurisdictional ambiguity also raises regulatory uncertainties. However, cryptocurrencies could help offset the invisible tax of inflation and negative real yields that savers currently face.

Fuelling the Future: Bull Markets and the New Wave of Technology

Periods of strong economic growth, commonly referred to as "bull markets", play a vital role in funding new innovations that drive future progress. By increasing the availability of capital, bull markets empower entrepreneurs to pursue ambitious ideas without immediate concern for profitability. This dynamic has consistently yielded breakthrough technologies throughout history.

In recent years, cryptocurrency bull markets have served a similar function. Since first emerging over a decade ago, cryptocurrencies like Bitcoin have seen dramatic price rises followed by prolonged declines, creating distinct cycles. During bull phases, a surge of investment has entered the space. For the tech-savvy, this presented opportunity to launch new blockchain projects with goals of building decentralized applications and services.

The results of this experimentation are plain to see. Projects like Ethereum have grown into massive open-source platforms powering thousands of decentralized applications. "Ethereum killers" like Solana also now boast sizable developer communities and multi-billion dollar market valuations. Meanwhile, decentralized finance protocols have facilitated billions of dollars of financial activity, laying the foundations for a more open financial system.

962b1997a4e5326d49412265a0ae2fcb.png Source: https://defillama.com/

This growth has directly created jobs and businesses and indirectly supported many others. Crypto exchanges now employ thousands to handle trading and compliance. Projects maintain large core developer teams and often expand functions by integrating other startups as services. Entrepreneurs run media brands, tools, and services to support the burgeoning industry.

Wealth creation has also been substantial. Early employees and backers of now-mature projects achieved life-changing gains as valuations rose. Meanwhile, the first generation of crypto millionaires was minted as prices increased over recent years. Going forward, as protocols mature, the wealth effects will only broaden through widespread token ownership.

Looking beyond, blockchain technology holds promise for optimizing existing systems across many industries. In areas like supply chain management, identity, voting and more - decentralized networks could bring greater transparency, security and efficiency. While challenges around scalability and interoperability must still be addressed, the long-term potential is significant.

0cf31769b3a7ebb81c41e3e8335152d4.png Hyper efficient blockchain powered industry.

A More Participatory Future: The Promise of Blockchain Governance

Could decentralized technologies one day transform how societies are governed? I believe blockchain networks have potential to enable new forms of direct democracy that are more participatory, transparent and resistant to manipulation. By removing centralized authorities from decision making processes, citizens could have greater oversight and involvement in political systems.

One application being explored is liquid democracy. This model allows voters to either vote directly on issues or delegate their vote to a representative they trust on specific topics. All votes and delegations would be securely recorded on a public blockchain. This could empower individuals to have more nuanced involvement based on their expertise and interests. Testing is underway in countries like Estonia to better understand blockchain's viability for voting.

https://www.blockchain-council.org/blockchain/blockchain-governance-in-estonia-may-be-inspiration-for-the-entire-world/

Blockchain networks also facilitate new forms of community governance without centralized intermediaries. Projects like Decentraland have created virtual worlds where land ownership, transactions and even lawmaking are managed through on-chain democratic processes. As these metaverse experiments scale, they may reveal new models that could translate to the physical world.

Beyond politics, distributed ledgers open avenues for more efficient and equitable social programs. Countries like Taiwan have run trials issuing basic income on blockchain. This ensured funds went directly to citizens, bypassing bureaucratic inefficiencies. The transparency of blockchain also combats issues like fraud and corruption that have plagued some traditional welfare systems.

https://ubitaiwan.org/en/  

Supply chain management is another area ripe for optimization using blockchain. By providing immutable records of transactions, origin and custody for physical goods, distributed ledgers eliminate single points of failure. They also enable consumers to trace product histories with confidence. Industries like food, pharmaceuticals and precious materials have begun piloting such applications.

Overall, while centralized control may remain entrenched in the short term, decentralized technologies are slowly beginning to transform governance models and social systems for the better. Through enabling direct participation, transparency and trust minimization, they could create a more just and prosperous future for all.

The Path Forward: Maturation, Integration and Mass Adoption

While much progress has been made, realizing blockchain technology's full potential faces hurdles. Chief among them is the need for further protocol maturation to address issues like scalability, interoperability and sustainability. Developers are actively working to solve such challenges through technical innovation. As networks evolve, expect user experiences to increasingly resemble traditional applications in ease and performance.

Coexistence, not competition, will define blockchain's relationship with existing social and governance systems over the long term. Rather than replace centralized structures, distributed ledgers are poised to integrate with them, each playing to their respective strengths. Financial institutions already offer crypto services and some central banks explore digital currencies. Blockchain identity solutions partner with governments. Such symbiosis, not disruption, will drive mainstream adoption. Once crypto gets a foot in the door the likelihood that the door will close is miniscule.

8dcb5137d00745e070c5c0641c10ff1c.png Cooperation and coordination, living in harmony.

Another factor is generational change. As younger, more digitally native demographics enter positions of influence, openness to decentralized models will rise. Their expectations of transparency, participation and self-sovereignty align naturally with blockchain's attributes. Education will also cultivate mass understanding needed for widespread social integration.

Looking decades ahead, decentralized networks may come to underpin core functions across society in hard to imagine ways today. From digital identity and voting to currency and property rights - blockchain offers a trustless public infrastructure supporting transparent, participatory systems. Individual empowerment over data and assets brings new levels of personal freedom and economic opportunity.

In conclusion, while challenges remain on the path, blockchain technology's philosophical importance is securing an open, just and prosperous future for all. Its decentralized, trustless and transparent nature optimizes human coordination and cooperation at a global scale.

I hope this essay has provided useful insights into cryptocurrency and decentralized networks, their pros and how they may evolve. Please share this content to spread understanding. For more analyses like this, subscribe to receive future updates.

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Gryphonboy
Gryphonboy

Small-time nerd. Publishing my book online for free! Check back every Sunday for the latest chapter. If you have any suggestions, corrections, criticisms, or just want to say hi please feel free to make them in the comments.


Gryphonboy's Crypto Journey
Gryphonboy's Crypto Journey

Dedicated cryptocurrency advocate! I hold the majority of the assets I discuss. This is not investment advice. Views and analysis expressed are my own and pertain to projects that I am invested in and passionate about. Support my work by tipping what you can here or you can support me directly by donating to gryphonboy.eth

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