Engaged in the frenzy of the crypto-sphere, obsessively looking at the DeFi ecosystem, trying to participate in all the airdrops, faucets, giveaways and contests that flood our lives every day, (and thanks to which we feed our avant-garde energy and feel like pioneers of a gigantic revolution), striving to understand each new protocol (to understand Harvest Finance in depth, we would need a year!), yesterday, I reflected that sometimes we do not have time to analyze what is the distinctive concept that identifies us, the crypto aliens.
Something like “what is the problem that the crypto-sphere solves?”
What does tokenization and decentralized value transfer solve?
Yeah, you guessed it! The elimination of the middleman, especially the banks and bankers.
Do you remember Francisco D’Anconia? This was a character from Ayn Rand's novel Atlas Shrugged. His "money speech" is very famous. We should all read it to understand why the crypto-sphere has fascinated us since Satoshi Nakamoto's white paper.
D’anconia's discourse is used in colleges around the world, because it contains “the conceptual” about the transfer of value. I only transcribe two paragraphs:
- “When you accept money in payment for your effort, you do it only with the conviction that you will exchange it for the product of the effort of others.”
- “The Americans were the people who coined the phrase: "make money." No other language or country had ever used these words before; men had always thought that wealth was a static quantity - to be snatched, begged, inherited, distributed, plundered, or obtained as a favor. Americans were the first to understand that wealth has to be created. The words "make money" contain the essence of human morality.”
And since I am only interested in medium and long-term fundamentals, and not in token prices, based on the words of D'Anconia, I want to make it clear that for me, the great difference that exists between "currency" and "money" is that currency "is printed" and money "is made."
The printing of the currency is in the hands of a centralized bureaucratic organization called the government, and this printing is made at the discretion of the interests of those bureaucrats according to their need to hold the power assigned to them. Instead, money is made by people like you and me, on a daily basis with our work, demonstrating our skills and making others choose them for themselves. D’Anconia says in his speech “An honest man is one who knows that he cannot consume more than he produces”.
Since governments can discretely print their currencies, there is a permanent transfer of wealth from your bank account to the government and to the financial / speculative sector in general.
For that they invented the fiat print, to have control and to be able to anesthetize the herd with a huge hallucination, like those produced by prohibited substances. I once heard the legendary Andreas Antonopoulos say that fiat money is a huge hallucination that has us all haunted, and when that hallucination is over, the entire traditional financial system is going to crash.
Do you know how the banking system really works and who is basically the generator of the inflation of your fiat?
The Cantillon effect describes the uneven effect of monetary policies on the economy. That is, if a Central Bank injects more money into the economy, the resulting increase in prices does not occur uniformly. Richard Cantillon (1680-1734) was the first economist to claim that any change in the money supply distorts the structure of an economy.
This is because the newly created money is not distributed simultaneously or evenly throughout the population. The process of monetary expansion therefore supposes a transfer of wealth.
Austrian economist Frederic Hayek compared the Cantillon effect to pouring honey into a plate. Honey, unlike other more liquid substances, spreads little by little from the center to the sides. As it is not done uniformly or simultaneously. Apart from controlling the quantity, it is also relevant to do the same with the place of departure. This reflects that the government and some companies close to it will benefit the most from the newly created money. They receive the money before prices have increased due to the further increase in demand.
Image of Steve Buissinne in Pixabay
In the Bretton Woods agreements it was decided to adopt the US dollar as the international currency, under the condition that the Federal Reserve uphold the gold standard. From 1971 on, everything fell for good and the dollar became a de facto fiat currency, backed by an international hallucination, with no intrinsic value.
In the modern economy, all money moves between three groups:
- Central Banks
- Commercial banks
- Households / Companies
The currency of an economy (fiat money) is made up mostly of banknotes, specifically between 90% and 95%.
Of this amount, almost everything is in the hands of households and companies and only a small amount is in the possession of commercial banks. The currency is an asset for households and companies, and, in return, a debt for Central Banks. The currency is a debt of the Central Banks with all of us, with all the players that interact in an economy.
But fiat money is a very small amount of money in circulation, in fact, it is a tiny amount. Where is the rest? In bank deposits. When you deposit cash in the bank you are in fact reducing the debt / risk of the Central Bank by the same amount as the cash you deposit. The currency is "guaranteed" by the Central Bank, it is a debt for it, therefore, if you return cash, you reduce it risk. And when you take money out of your account to pay something, you reduce the risk of the commercial bank where you have the account. When a bank grants a loan, it is creating a deposit with the final recipient, and in the end it is creating money in circulation. The bank does not have the money it claims to be lending you, it is creating it and you are going to have to pay for it.
Commercial banks create money because the deposits (your account) are only a promise of payment and with that promise of payment they create other deposits through credits.
The most difficult currency to see with the naked eye is that constituted as Central Bank reserve. It can be said that it is the bank deposits of commercial banks with the Central Bank. They are the deposits that the Central Bank requires from the banks to be able to operate, in addition to that the banks wish to save. The liabilities of a Central Bank are its reserves, which, in turn, are an asset for commercial banks. The asset of a Central Bank is the debt of the national governments.
Image of Djeebuss in Pixabay
Households and businesses need the support of the Central Bank for currency, and the commercial banks need the support of the Central Bank for the deposits.
The establishment has devised a death trap for the sheep. Governments, run by corporations, make laws and order the printing of currency at their discretion, and because of Hayek's "honey" effect described above, corporations always receive more spilled honey and before anyone else.
The herd can only get into debt, use their salary to pay loans, mortgages and credit card installments that the banks “lend” them, generating monetary aggregates that will later be guaranteed by the corresponding Central Bank.
The moment a commercial bank grants credit, it is creating a deposit. Since this money is not transferred, it is a debt in private hands.
The money issued by the Central Banks is no other thing that that the commercial banks demand. The only thing that the Central Bank decides is the interest rate and depending on this, the commercial banks decide what amount to ask for. The reserves issued by the Central Bank are established based on the deposits that commercial banks want to create, in turn based on their profit expectations. Commercial banks create money when they lend money. When your bank lends you money so you can buy a house or a car, it is creating money, it does not act as an intermediary between you and a saver, it creates it, plain and simple.
The sequence is as follows:
- 1st The commercial bank lends you money to buy the house
- 2nd In its assets you appear as a debtor (you owe the bank that amount) and in its liabilities it appears as a counterpart a bank deposit. Money created.
- 3rd The money it has lent you is transferred to the seller's bank as a bank deposit in its liability (it owes it to the one who has sold you the house).
- 4th The seller's bank has to cover this liability with Central Bank reserves.
In short: a deposit has not been transferred from one person to another, what has happened is that "a deposit has been created" and a debt in the market. A monetary aggregate has been created without the Central Bank having intervened or altered its monetary base reserves.
How about?
Image of Mustafa Kucuk - v. Gruenewaldt in Pixabay
Commercial banks have no problem with reserves. If they lack, they are lent them at the end of the day by other banks and, if in an exceptional situation they do not want to lend another bank, the Central Bank goes. In practice there is no limit to the creation of money and debt by commercial banks. There are no limits to the speed with which banks can create money because even if they do not have Central Bank reserves to make their payments, they know that they will receive money from other banks and even the Central Bank itself.
Is the power of commercial banks understood? This power not only affects us but also the States that live off the issuance of debt through these banks themselves.
Is it understood why commercial banks are so violently opposed to Bitcoin, any cryptocurrency and DeFi?
Is it understandable why commercial banks, Central Banks, and governments are trying to climb into the crypto-sphere by issuing devilish hoaxes like CBCCs? What about JPMorgan's crytpocurrency? And the Libra project?
Is it understood why governments see the crypto-sphere as subversive and disturbing, and having no way to control it, they only think of regulations and taxes?
Although I do not lose sight of Sir John Maynard Keynes's words "in the long term we're all going to be dead", I am still much more interested in the fundamentals of tokens that have the potential to unravel the trap of corporate centralization, rather than in the prices of those tokens, highly dependent on short-term events.
With that said, let's move on to today's two tokens.
WAX
Those who follow me on this blog have heard me say multiple times that the next "big thing" in the crypto sphere is NFT.
The WAX blockchain is deeply committed to the trading and hodling of non-fungible tokens (NFTs). With the arrival of new tools and supply markets to the NFT ecosystem, a large number of new users are approaching this market of colossal dimensions.
What is an NFT? Very quickly, a non-fungible token is a token that represents a single object. There is no other 100% similar token. NFT is the opposite of a fungible or regular token, which are similar and interchangeable. Another very important difference is that fungible tokens can be subdivided into smaller units and NFTs cannot be subdivided.
An NFT can represent a lot of different things, from title deeds to the possession of any asset. But the most important quality of NFTs is that they can verify digital security without requiring a centralizing entity to confirm authenticity. NFTs appeared as attractive items about three years ago. But with the demand for new NFT content from new entrants to blockchain technology, big brands and companies are beginning to understand the huge market they can represent. Very soon they will be a market in itself, decentralized and available to anyone who wants to be the owner of a digital item that represents a unique asset. NFTs are going to be as important as movies, music, video games and they are going to become a new category of entertainment.
This means a wonderful future for WAX, which has already surpassed Ethereum in terms of trading activity for NFTs.
WAX defines itself as the most convenient and secure way to buy, sell and trade virtual and physical items to anyone, anywhere in the world. In its White Paper, WAX claims to have designed this platform to solve specific problems in the digital goods market, and that millions of people are waiting to use it.
The digital goods market includes virtual items such as videogames and tokenized consumer products. The topic of NFTs is very popular nowadays, but until very recently it was a conversation only for cypherpunks, nerds and crypto enthusiasts, basically, the ones that understood about video games. The idea that NFTs could replace virtual items centrally controlled by the owner companies is setting up a new investment ecosystem in NFTs and video games. With the Ethereum ERC-721 standard, which later led to the ERC-1155 standard, a large number of developers captured the idea of ??attracting new players who can be real owners of their virtual items. Video games can be the gateway to the massive adoption of blockchain technology. The impressive amount of attention that the average consumer gives to video content creators, notably sports content, is presented as a huge opportunity to create NFTs and trade them in existing markets, and those that will populate the crypto-sphere from now on.
The WAX platform solves many problems for entrepreneurs and developers who want to participate in this fast-growing market for digital goods. Just imagine what can happen when the large number of people who still do not have access to the internet, start to have it, according to the forecasts of the provider companies.
The WAX token model (WAXP) is designed to conduct various activities within the WAX ecosystem, basically staking, rewards, and voting.
We are seeing the evolution of utility tokens on a daily basis. The first generation (2011), the traditional utility token model (example TRON), is characterized because its value is theoretically related to on-blockchain transactions. The second generation (2018), the exchange token model (example BNB token), has an indirect value relationship, although not transparent, with off-blockchain activities. The third generation (2020), the decentralized service tokens (example KYBER), have a direct relationship with on-blockchain transactions, and the fourth generation (2020), the interblockchain tokens (example WAX), obtain their value by performing transactions directly linked to economic activity in multiple blockchains, each one selected for optimal performance.
The fundamental difference between the third and fourth generation is the inter-blockchain component. The third generation develops on-chain activities, but in a single blockchain. WAX, the fourth generation, carries out on-chain activities as well, but its activities are harmonized with the optimal blockchain for that particular purpose.
WAX is the ideal platform to buy and edit NFTs. For that you need to create a WAX account. There are three different classes of WAX accounts:
Regular WAX account
Ledger WAX account
WAX Cloud Wallet
Regarding the founding team, the names are impressive.
William Quigley, is CEO of OPSkins.com and WAX.io. He has worked in the development teams of Tether, GoCoin and Mastercoin.
Jonathan Yantis, BTC mining pioneer and blockchain investor. He was a board member of the first ICO, Mastercoin.
These two guys are co-founders of Tether, and they were huge investors in the Ethereum ICO. They are considered experts in the crypto-sphere.
Another interesting member of the team is Lukas Sliwka. He is the CTO of the Worldwide Asset exchange, very active in the technology scene in Los Angeles, and a member of the Los Angeles CTO group.
Conclusion. I have WAX ??in my WAX account and I also have NFTs there. WAX tokens facilitate the operation of WAX smart contracts, which are those that allow millions of people to trade digital items, so WAX is a very useful token, given the revolution that is coming with NFTs. The WAX ??platform can become synonymous with NFTs trading, because it is designed to attract and serve thousands of powerful companies and vendors who will undoubtedly participate in the global digital items industry. As soon as the fans of videogames start to operate seriously in this market, only with them will we have a fabulous operating figure. And everyone is going to need WAX to operate. And there is no middle man in sight! We can be in the presence of the elimination of thousands of intermediaries, in the transfer of property rights, in music, in art in general, in copyright, and many others. All of that is tokenomics in NFT.
OCEAN
I just received an invitation on my phone a few hours ago to take part in a survey by the French business magazine Le Point.
For those who don't read French, I translate: “Are we slaves of Amazon, Facebook and Google? Survey. The giants of technology reign over our lives and sometimes impose their laws. Have they accumulated so much power? Should they be dismantled? "
This is what OCEAN is all about.
According to the OCEAN White Paper, more data means more accurate artificial intelligence (AI) models. The biggest winners are the companies with the most data and the most AI expertise. Startups may have good AI talents, but they have a gigantic lack of data. The power of having data and talent in AI is in the hands of very few.
The goal of the Ocean Protocol is to expand the benefits of AI by equalizing the opportunity to access and monetize data. The protocol created simple tools to publish and consume data such as decentralized "datatokens", which interoperate with ERC-20 wallets, exchanges and DAOs. But there are plans to make the operating platform for other blockchains. The objective is to make these free access tools for developers and the general public (programmed in Solidity, Pithon and Javascript) to serve to create together an open and permissionless data economy. The platform also has a Data Farming program that encourages the provision of data. OceanDAO receives funding from apps and service provision in the ecosystem, and from the Ocean Protocol Foundation, and thereby funds software development.
OCEAN is self-presented by the platform as the token for the Web3 data economy. The OCEAN token can be used for stake on data, to govern the funding of the Ocean community, and to buy and sell data. The OCEAN offering is capped to 1.41 billion tokens. 51% of this offering is provided as a Bitcoin-like schedule in decades, to fund community projects managed by OceanDAO.
Data services are obtained through datatokens. Each datatoken is an ERC-20 that allows access to a specific service. Ocean smart contracts facilitate the publication of data services (presentation and mint of datatokens) and the consumption of data services (spend datatokens). OCEAN is designed to grow as data usage increases. Ocean Market is a community open-source data marketplace, which automatically determines the price of data using an automated market maker (AMM). Each datatoken has its own AMM pool, and consumes gas wisely. Anyone can add liquidity. The publication of data is done through an IDO, Initial Data Offering. The vision of the company contemplates the co-existence of thousands of data markets like this one. Ocean market, being open-source, includes tools for developers to code apps and create their own markets, allowing access and monetization of data from any source.
This is very different from the way large centralized corporations handle our data and content today, right?
Ocean protocol stores metadata, links to data, and provides licenses and pricing tools. A huge number of data marketplaces can be used with these tools to connect data providers and consumers. The protocol is designed so that the owners of the data do not stay in a single market, and can handle it however they want.
The Ocean Market app allows you to sell, curate and store data. Ocean Protocol libraries allow you to build your own applications to secure and preserve data exchange. Each service in Ocean Protocol receives its own datatoken, allowed in wallets and in data marketplaces.
The main players in the Ocean ecosystem are data providers (offer data), data consumers (obtain data for their activities), marketplaces (connect data providers with consumers), service providers (provide computing, storage and algorithms) and the network nodes that support the protocol.
Why did a token like OCEAN has to be invented? Since the protocol runs on Ethereum, couldn't Ether be used directly? OCEAN is a utility token that responds to the specific policy of the protocol. Users are awarded tokens that are minted in return for the provision of high-quality data, its relevance and its availability. Furthermore, from the users' point of view, exposing oneself to the volatility of an external token could distort the data exchange agreed in the different marketplaces. For this reason, users know that they have OCEAN and care about providing valuable data that supports it, precisely that is their reward.
As for the founding and management team, the visible faces are Trent McConaghy and Bruce Pon.
The former does not have an accessible LinkedIn profile, although he has a long and recognized track record in AI, having published several books and papers in his career, and created several startups, including Solido, acquired by Siemens in 2007.
Conclusion. What problems does the Ocean protocol solve? First, it unlocks data that can be used productively. The amount of data produced on the planet is growing exponentially, and is massively under-utilized. Companies are often ignorant of the quantity and quality of data they have, and there are many others that are in dire need of data and do not know how to obtain it, particularly in the field of AI. The Ocean protocol has a vision of a transparent and equitable world in which data can be freely traded by its owners for efficient use. Data providers can maintain control of data while ensuring transparency. Hardly anyone doubts that the most valuable resource on the planet in the 21st century is information. Are we going to leave control of our data to a handful of companies?
As usual, none of the things written in this post are financial advisoring and are not intended to replace personal research.
Thank you for reading!
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