Merry Christmas and a Happy New Year to all Publish0xers!
Did you realize that in the near future there will be no more "cents"?
Why is this very important?
Because we have been used for several centuries to the decimal system that divides a monetary unit into 100 mini-units that we call cents (or pennies).
But now the divisions are not more into 100.
One satoshi is 1E-8 BTC
One wei is 1E-18 ETH
One lovelace is 1E-6 ADA
And so we could continue.
If we go a little deeper, it is very likely that the paradigm of measuring time in weeks and days will also disappear and we will move on to measuring it in epochs and slots. But leave this to the physicists and metaphysicians, I don’t want to cause a very big disruption before the end of the year.
My country, Argentina, has been and continues to be fertile ground to test any economic experiment imagined by the world's skulls, who spend their days in front of their desks without the slightest contact with a greengrocer or a hardware store. The results are visible. Sustained hyperinflation for more than 50 years, lack of confidence in the currency and in governments, and a permanent search for alternatives to save a little money. In the last 139 years, Argentina changed its currency 5 times.
One such experiment was the famous 1: 1, in which the Argentine peso was pegged to the US dollar so that 1 dollar was worth one peso and vice versa. This lasted 10 years (the 90s), and the consequences of the experiment were seen in 2001, with the massive closure of banks due to violent runs, the famous "corralito" (little chicken yard), which was a type of a martial order that prohibited you from taking the money you owned in a bank, street riots, assaults on supermarkets, dead, injured and the president who had to escape by helicopter.
Image of MonoRenal in Pixabay
The goal of 1: 1 (convertibility) was to eliminate hyperinflation. And this was achieved. At a very high cost, but it was achieved. It went from 1,344% hyperinflation in 1990 to 25% in the first 12 months. But you know, the lagged exchange rates combined with the differences in productivity bring an increase in imports, the deterioration of the national industry, unemployment, and many other things that result from improvised administrators who become rulers. I repeat, everything ended very badly and we went on to the next experiment.
But the results of living without inflation (and there were months with deflation), brought feelings that we Argentines did not know. One of them was taking care of the "cents."
When you are in the inflationary spiral, you don't have time to think about cents. But suddenly, we realized that cents existed, and not only that, also low-denomination bills began to have value. It was magical, suddenly everyone was looking at the two figures to the right of the comma.
This reflection comes from the beginning of this post. One of the most important things that, according to my criteria, the crypto-sphere is leaving us, is teaching us to think in decimals after the comma.
Boys and girls born today will know nothing about "cents". They will buy everything with sats, weis and lovelaces. That is why it is very important that we start thinking in terms of sats, wei and lovelaces now.
Sure, this has to do with our current relationship with cryptocurrencies. At the moment, and as we are in the infancy of this new world, almost all of us think of hodling, staking, earning interest, lending, borrowing, farming. This automatically leads us to think of BTC, ETH, and ADA, instead of sats, weis, and lovelaces.
But mass adoption is going to make us think about decimals. Be it to transfer, pay, swap, DeFi, farm, and everything that comes, we will have to deal with small decimals all day.
Many call this, almost disparagingly "dust", even some applications offer the service of "converting the dust". I think the "dust" is much more important than it seems.
I believe that today the crypto-sphere is in a hypothetical scenario similar to that of the internet in the late 90s. The lack of control at the end of 2017 is similar, according to my criteria, to the first incursions of the large telephone companies (telcos) of the late 90s, and the FOMO that led them to buy all kinds of dotcom startups around the planet, investing fabulous numbers in companies that were not worth a penny, and setting up the famous dot-com bubble that burst at the beginning of the millennium.
When that happened, what we could call the "killer application", aka Google, appeared and the world was never the same again.
I think we are in the same instance: the crypto sphere burst in 2017 with junk ICOs that abruptly distorted the ecosystem, then slowly reconstituted and consolidated in the last three years. But, I don't know if you will agree, I think the "killer application" has not appeared yet. But it is about to appear.
When it does appear, we will quickly move to mass adoption, and from there to using sats, weis, and lovelaces every day.
The old adage says "when in an economic system there are two currencies, one ‘good’ and the other ‘bad’, the bad circulates and the good is treasured."
When can a coin become "bad"? When its issuance is in the hands of politicians, this is indisputable. If cryptocurrencies are issued by smart contracts, how could it become "bad"?
During this time, the prehistory of the crypto-sphere, fiat money circulates and crypto is treasured. Children born today will study in the elementary school that banks once existed, and that there was organized crime money laundered, and that there every type of scams was committed that ended in a disguised tax called inflation. By that time, there will no longer be fiat money, and they will be the ones to define what is a "bad" and a "good" currency.
With that said, let's move on to today's two tokens.
NXM
The Code of Hammurabi - a legal code for Babylon, in what is now known as Iraq - is nearly 4,000 years old.
It includes some clauses dedicated to the subject of "loan for dangerous adventures", a type of marine insurance accompanied by a loan: a merchant received the money to finance the trip of a ship, but if it was wrecked, he did not have to repay the loan. If he came to port, he had to pay the principal and interest.
Image of eikira in Pixabay
Around the same time, Chinese merchants reduced their risks by exchanging goods with other ships, so that if any of the ships sank, they all lost a little.
A couple of millennia later the Romans structured insurance as financial contracts, with an active marine insurance market.
The European governments of the Renaissance, entered the insurance business as a way to raise money, usually to finance a war or something similar, in the political storm that was the Europe of 1600 and 1700.
Image of chantal MURE in Pixabay
Today, the largest insurance market confuses the lines between insuring and gambling: the financial derivatives market. Derivatives are financial contracts that allow two parties to bet on anything that can range from fluctuations in the exchange rate to the possibility of a debt being paid, to the price of cereals or the weather.
Financial derivatives are a form of insurance: an exporter hedges against an increase in the exchange rate by betting that it will rise; a wheat-growing company protects itself by betting that the price of wheat will fall. But unlike the boring insurance of yesteryear, with derivatives, it is no longer necessary to find someone with a risk that wants to protect against. You just have to find someone who wants to bet on any uncertain event anywhere in the world. Before the international banking crisis of 2007-2008, the total nominal value of derivative contracts in circulation was much higher than that of the world economy itself.
The insurance industry evolved over time from a community-based model to an adversarial model dominated by large corporations. It is inefficient and leads to a harsh environment in which consumers always end up paying very high costs. The advent of blockchain and the continuous change in the mental model of individuals, aimed at negotiating directly between parties instead of needing an intermediary entity that provides trust, is going to become a totally different insurance system than the one known for 500 years.
Thus was born Nexus-Mutual.
Using blockchain, Nexus tries to recover the concept of "insurance", creating incentives aligned in the Ethereum network, through the use of smart contracts. When the Ethereum network appeared and smart contracts began to be used, Nexus planned to take the insurance industry towards the realm of decentralization. The idea is to build an association between individuals based on respect and mutual understanding, on a platform in which individuals only have to trust the system, not all that make it up. The goal is to provide members with simpler, transparent, accessible, and cheaper protection against risks.
Nexus Mutual is a decentralized alternative for the insurance industry. It uses blockchain to create an association between individuals (a risk-sharing pool) to return the power of insurance to the people. Anyone can become a member and purchase coverage. It replaces the idea of traditional insurance because it is entirely in the hands of the members. Members get financial incentives for participating in risk assessment, claims assessment, and governance.
At the moment, Nexus Mutual only handles one product, the coverage against problems with Smart Contracts. The product is aimed at providing protection to the Ethereum community against hacks in value-storing applications. But they will soon be entering more popular and comprehensive products.
By being a member, each participant becomes the owner of a part of the association, with membership rights represented by the native token NXM. The company is run by members for members.
The price of the token will vary according to:
- Funding level of the Capital Pool
- The minimum amount of capital required to support existing covers
The NXM token can be used to buy hedges, to participate in claims evaluation, to assess risks, and for governance. All funds raised from the purchase of tokens belong to the members. Benefiting all members from the success of the platform, the aligned incentives feed the community spirit, as a counterpart to the current unbalanced and adversarial relationship that exists between an individual and an insurance corporation. The price of the NXM token is tied to the adoption and performance of the project, rather than speculation.
The founder of Nexus Mutual is Hugh Karp, an insurance industry professional, actuary, with over 15 years of experience.
Conclusion. The long-awaited decentralization reaches one of the most confusing industries in finance, the insurance industry. Can we get rid of the powerful, inefficient, costly, adversarial, one-sided insurance industries? A project like Nexus Mutual tells us that we are very close. The average person believes that the insurance industry needs a strong institutional backing to guarantee the payment of the contracts, but is there something more reliable than the blockchain for this? that is, it is not better to trust a system coded in the blockchain and not a centralized company board of directors who can be highly influenced in the assessment of any risk?
Take for example health insurance. They are fabulously expensive, they create treatments and sell drugs, even if they are not necessary, to keep the machine running and all the links have their bite, and they promote improper practices among medical professionals who are drawn into a wicked system. Isn't a decentralized community much better voting on the authorization and assessment of an individual's medical risks?
I believe that Nexus Mutual is the beginning of the end for centralized insurance companies, just as the crypto sphere, in general, is the beginning of the end for banks and traditional finance.
ONT
Ontology is the part of metaphysics that deals with "being" in general and its transcendental properties. In communication sciences and artificial intelligence, ontology is a network or data system that defines the relationships between the concepts of a domain or area of knowledge.
That is precisely what Ontology (the blockchain ecosystem) is, an open-source blockchain specialized in linking identities and digital data. It is a decentralized application development platform that combines multiple concepts to create a modular, multipurpose ecosystem in the business environment.
Ontology defines itself as a trust-based distributed collaboration platform.
Ontology provides both high-performance public blockchains, as well as a series of ledgers and smart contract packages.
The Ontology infrastructure is comprised of Ontology's own blockchains, ONT frameworks for modular and customizable blockchains, and Ontology's interaction protocols, which enable cross-industry collaboration and cross-industry compatibility. It has an infrastructure layer, another of modules/protocols, and a final layer of common applications. The organization of a project is very simple and is designed so that any company can incorporate blockchain technology into its operation in a modular and fast way.
The launch and distribution of the Ontology tokens did not happen with the typical pre-sale to raise funds through an ICO. Instead, it was decided to launch the platform under the backing of the NEO blockchain, distributing the tokens for free via an airdrop to all NEO coin holders in January 2018. The ONT coins were launched as tokens with the standard NEP 5. Then, in the middle of the same year, they go independent and launch their own blockchain. Ontology uses a dual token model, ONT, and ONG.
ONT is the currency used to participate in the consensus.
ONG is used for internal services of the Ontology network and is also called Ontology gas.
Ontology brings two cutting-edge concepts into space: sharding and VBFT. Sharding was already implemented by ETH 2.0 and consists of a fragmentation solution, where network tasks are divided into “shards”, increasing the level of network scalability and increasing the speed of transaction processing. This is where ONG tokens are used as an incentive. VBFT is the consensus mechanism, which is achieved through a combination of proof of stake (PoS), verifiable random function (VRF), and Byzantine fault tolerance (BFT).
To facilitate the management of companies their first foray into the blockchain world, Ontology offers solutions already built in the application layer, such as ONTO, a complete decentralized client. There is also an ONT USE search engine and a framework for distributed data exchange ONT DDXF. Being a decentralized development platform, Ontology allows established companies and startups to create any application imaginable.
As for the team, Ontology was created by the same creators of NEO and the OnChain company. Its founder is Jun Li, who joined OnChain's Erik Zhang and Da Hongfei. The objective of the Ontology project was from the beginning of the construction of a modular and scalable system so that companies can develop decentralized blockchain applications, without having to change their current systems. Companies can use a private blockchain and also a public one. Each and every transaction is confirmed in a decentralized environment, which means that no person or authority can take control of the network.
Some say the project was built in conjunction with the Chinese government, as China plans to expand blockchain technology on a large scale.
Ontology was chosen to be part of the Microsoft Accelerator in December 2018 and was also officially listed as a Google Cloud Partner, in February 2019. In October 2020 they also announced that they are building on Polkadot, the blockchain that connects multiple blockchains.
Conclusion. The management of companies hears about the issue of decentralization and blockchain every day and knows that all businesses are going to have to venture into that field, whatever the industry. Managers know they have to start, but they don't know how to begin. It is a case similar to the one that occurred in the mid-90s with the Internet and the first sites. At that time, the first solutions were gradually appearing so that companies could upload their first page to the Internet, and thus be present. With projects like Ontology, companies are beginning to be able to develop their first steps in the new blockchain technology. With a very short stay on the market, Ontology has become one of the most popular projects in the crypto-sphere. Its solution is really powerful and is very well designed, with modular structures that can be easily combined to build different applications without having to be an expert on the subject. While it is true that the competition will be very tough in this area, I think there is a lot of room for companies like Ontology to grow a lot in the short term, as mass adoption begins. And Ontology is pioneering, with what that means in the decentralized world.
As usual, none of the things written in this post are financial advice and are not intended to replace personal research.
I am interested in showing in this blog the fundamentals of crypto-sphere projects that may mean a paradigm shift in the near and not so near future. This approach may be different and complementary to the posts of other talented colleagues at PUBLISH0X that show shorter-term variables and which I follow with great interest, since I, of course, am also interested in the short term and in putting together a solid portfolio.
Thank you for reading!
You can follow my blog Tokenomics here https://www.publish0x.com/tokenomics
Publish0x is a great idea. Consider signing up with my link https://www.publish0x.com?a=J0dNkpAveL
Hey you guys who speak Spanish, you can follow me on my Linkedin group "Relax Financiero"
https://www.linkedin.com/groups/12381049/
If you have any questions or comments, please feel free to leave them down below
You can also contact me at [email protected]
You can also follow me on
- Telegram https://t.me/whytokenomics
- Twitter https://twitter.com/SirGerardThe1st
- LinkedIn https://www.linkedin.com/in/gerardosaporosi/
