The query that’s being requested on this article is one which has been beforehand answered by the Blockchain visionary and founding father of the Swiss Blockchain platform Counos, Pooyan Ghamari. On this article, we’ll check out his new imaginative and prescient of worth switch outdoors the standard system of banking that’s based mostly round fiat cash.
However why is that this query an essential one? It will truly be simple to know. The fashionable thought of worth switch principally revolves round utilizing the banking system and fiat cash. However there’s something inherently disadvantageous about that. Let’s discover out extra.
What Is Fiat Cash?
To begin answering the unique query we first want to check out the thought behind fiat cash. What it truly is and why are we utilizing them in the present day? Pooyan Ghamari has put it so easy and clear:
“Basically, cash is a car for transferring worth.”
He additional gave an instance to make clear this definition. For instance, once we buy US greenback we give the worth and asset that we’ve got to the USA Reserve Financial institution and as an alternative we get a paper invoice for that worth, which is in fact US greenback.
The identical is true for different fiat cash and fiat currencies all over the world. Think about once we buy Euro or another fiat cash, we’re actually offering the worth or asset to that worldwide or nationwide group or institute, in order that in flip for the worth that we’ve got offered we are able to get a bit of paper, which is the invoice, in order that we are able to use that for straightforward switch of worth.
In such programs of worth switch, all of the individuals who take part are on the mercy of the group, group, or the governments which are in control of the system. They’ll change the quantity of asset and worth and primarily take it increased or decrease. That is how the worth of fiat currencies get increased or decrease daily.
Now, in fact there are some fiat currencies which are extra secure due to the group or authorities that’s in control of it, comparable to Swiss Franc, which has virtually at all times been thought of some of the respected and dependable fiat currencies on the earth.
However however, there are different fiat currencies that aren’t doing so nice. For example, everyone knows what occurred to Euro not too long ago, that for the primary time in many years its worth obtained decrease than the US greenback. However there are far worse examples, comparable to what has occurred to the fiat cash of nations like Venezuela or Iran.
So, that is how fiat cash works and that is how fiat cash may be principally manipulated and turn out to be extraordinarily unstable.
How Did We Switch Worth within the Previous?
Now, we have to think about the way it as doable to switch worth and commerce prior to now. Pooyan Ghamari discusses how worth was transferred prior to now and the way property have been traded. Since way back, the best way enterprise and trades labored was based mostly on a trusted get together. Think about prior to now there was a trusted half. Now, somebody would come and provides them their gold and in return they’d get a receipt for that gold.
That receipt for gold would then be used because the car for transferring worth in a simple means with out having to switch the gold itself. Then they might give that receipt to anybody else for his or her commerce and enterprise. And eventually, the final get together might go to the trusted get together, present the receipt and get the gold from them.
However as time glided by and as companies and trades grew bigger and bigger, folks wouldn’t truly come and get the gold. They might simply depart the gold with the trusted get together and merely commerce with the assistance of that receipt.
This receipt for gold could be traded many occasions between folks for varied items and repair. This was the best way for transferring of worth till the thought of recent banks and monetary group got here fore.
New Paradigm of Worth Switch Proposed by Pooyan Ghamari
Lastly, the brand new paradigm is proposed. As Mr. Ghamari put it:
“The best way this method may be doable is that if a corporation or an organization can retailer gold and equal to that gold would promote the worth and asset to folks and supply them a receipt for that gold. And that receipt can be utilized to get this gold.”
On this system there is no such thing as a want for a fiat cash or nationwide cash. As a result of the property may be transferred and traded with out the assistance of fiat cash. Folks would give their property comparable to gold, automotive, valuable property, and many others. and get a receipt. Then use that receipt to commerce with anybody they need. Lastly, that receipt can be utilized to get that asset.
In such a system, there is no such thing as a longer a necessity for banks and standard financial programs. It’s solely the group, the opposite get together and the gold.
So, that is how it’s theoretically and virtually possible to switch and alternate gold with commodities and digital currencies with out the assistance from banks and reserves, and extra importantly fiat cash.