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 are going to check out his new imaginative and prescient of worth switch exterior the traditional system of banking that’s primarily based round fiat cash.
However why is that this query an vital one? It will really be straightforward to grasp. The fashionable concept 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 start out answering the unique query we first want to check out the thought behind fiat cash. What it really is and why are we utilizing them as we speak? Pooyan Ghamari has put it so easy and clear:
“Primarily, cash is a automobile 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 now have to the USA Reserve Financial institution and as a substitute we get a paper invoice for that worth, which is after all US greenback.
The identical is true for different fiat cash and fiat currencies world wide. Think about once we buy Euro or another fiat cash, we’re in truth offering the worth or asset to that worldwide or nationwide group or institute, in order that in flip for the worth that we now have supplied 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 accountable for the system. They’ll change the quantity of asset and worth and basically take it larger or decrease. That is how the worth of fiat currencies get larger or decrease each day.
Now, after all there are some fiat currencies which are extra steady due to the group or authorities that’s accountable for it, equivalent to Swiss Franc, which has nearly all the time been thought-about probably the most respected and dependable fiat currencies on the planet.
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 a long time its worth bought decrease than the US greenback. However there are far worse examples, equivalent 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 develop into extraordinarily unstable.
How Did We Switch Worth within the Previous?
Now, we have to contemplate the way it as attainable 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 way in which enterprise and trades labored was primarily based on a trusted social gathering. Think about prior to now there was a trusted half. Now, somebody would come and provides them their gold and in return they might get a receipt for that gold.
That receipt for gold would then be used because the automobile for transferring worth in a simple manner 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 social gathering might go to the trusted social gathering, present the receipt and get the gold from them.
However as time glided by and as companies and trades grew bigger and bigger, individuals wouldn’t really come and get the gold. They’d simply go away the gold with the trusted social gathering and merely commerce with the assistance of that receipt.
This receipt for gold could be traded many occasions between individuals for varied items and repair. This was the way in which 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 way in which this method may be attainable is that if a company or an organization can retailer gold and equal to that gold would promote the worth and asset to individuals and provide them a receipt for that gold. And that receipt can be utilized to get this gold.”
On this system there isn’t any 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 equivalent to gold, automobile, valuable property, and so forth. 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 isn’t any longer a necessity for banks and traditional financial programs. It’s solely the group, the opposite social gathering 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.