WHAT IS DIGITAL MONEY ?
Currency is a system for money. Money is a situational agreement between parties.” This is all about power, about behavior and governance. Governance is control! That is why conquerors put their faces on the back of the coins used under their control. Why are bytes different from paper? When paper was invented, we got paper money. Now we will have digital money, the digital real.
And who are we in this context? That’s the fun part.
We used to be defined by the extent of power over the physical – Now “we” are defined as power over the digital.
We are talking about a digital carrier instrument. So, what is blockchain? It is the sum of the technology plus the business (applications or contracts) plus the governance of the “we” that we agree on in context or situation. You lose both advantages of what you mean by the word blockchain if you just call it a technology. What if these advantages were captured in code? So this is like the invention of paper money by the Chinese times three. Blockchain is a governance technology. It gives us, or some community, the power or control over its digital realm to create a currency.
What is the difference between electronic and digital? Electronic – on my iPhone, I make a payment in my banking application. that passes in seconds. Digital – changes the following; I could be my own bank and have custody of my money. We can represent cash and title (any negotiable item) as tokens in the same place, so I can transfer value and ownership at the same time. I can make small payments for the cost of an e-mail .
What does digital do then? It removes the 2% payment cost and makes possible a very small payment to support the data economy. It greatly increases liquidity – all the complexity in foreign exchange, cross border, and post-trade reconciliation is eliminated.
Anything can be exchanged for anything in new digital markets with data owner control over identity, ownership, and market rules (voting), all with decentralized finance.
BIRTH OF THE DIGITAL CURRENCY
“Cash and account-based solutions provided by commercial banks are technologically inferior to currencies designed as digital bearer instruments”
The latter concept was first introduced by Bitcoin Design Paper more than a decade ago, and offers users censorship-resistant payment options with near-instant settlement completion globally with no intermediaries. “And unlike a digital bearer bond, money created through what we call “proof of work” rather than through debt is even better. Blockchain records leave no debt behind.
The Token Economy is being born. Don’t underestimate how few people have this level of understanding. Decentralization is a war for democracy in economics, politics and philosophy. Democracy has always been fought for and this is the battleground of this generation. The outcome is not certain – some battles/wars have been lost. Don’t underestimate the power of many little things either. Some say blockchain does very little. Which denounce the power of decentralizing a centralized and centralizing digital world. That is to miss the point that any big thing is only composed of many small things. Blockchain is a behavior change machine. Change a little the behavior of many people – when everyone is pointing in the same direction and everyone wins – get an incentive – then the war can be won.
We are moving to a digital (data) economy in 3 steps: In WEB1, data is about what data you can read or want to publish. You can publish data about things you want to sell on the Internet. In WEB2, the data is about what you said and did on the Internet. You give away this data and privacy for free, unknowingly, for free services. You are not in control. In Data
WEB3
it is about what data you have and can make money from it to drive machine learning (ML) and artificial intelligence (AI) applications (For example, my health data, data from my car, data from my solar panel). You sell access to this data, with appropriate access and privacy, that you control, to earn tokens to buy services. There, you are in control!
Why is Democracy Necessary?
It is about policy and the balance between public digital money (created by the central bank) and private digital money created in operations through tokenization whether for operations for companies that have real assets and also for private banks, funds and every regulated operation. I think a
DEFI
is a new kind of digital bank/marketplace with everything digital required:- identity (by reputation or TOIP credential), digital asset (property) and digital value (or money), payments and finance, liquidity and market making, and transparent governance. Digital private money is created by DeFi in a parallel exactly like today’s banks, but in a completely digital way.
The trick is to regulate reserve funds where wholesale CBDC can be a useful collateral. The future of digital value is what we call tokenomics. The alternative is just digital (programmable) money created and controlled by the state. I am convinced that a new kind of digital banking is being born. Just as Amazon was a new kind of bookstore. You can still buy a book in a store, but today no one can imagine not having e-commerce. Programmable money is inevitable. We need a new digital model for democracy or we will give up our digital rights because we lack the appetite to take on any digital responsibilities or duties, for example, over custody.
I agree that any tool can be used for good or evil. It is the democratic process to make that decision that matters.
CBDC should never be controlled by the state since there is an isolated Central Bank
The idea of state-controlled programmable money (combining money and politics) is so new that few people understand what it can mean. This issue is conflated with concerns about fiat money.
I believe there are 2 separate issues:
1- Money supply and inflation. These new tools can help central banks to better manage inflation, which is positive.
2- Control – this is the most important, with programmable money, someone else controls what you can do with your money. Therefore, it is no longer under your control. This is frightening and must be understood. This gives the other person control over how you use the money in your wallet. I make an analogy to reward point programs. Points per coffee you get from Starbucks (which is kind of owned by Starbucks), it would be better to get it in digital reals, since a $10 bill in my pocket gives me the freedom to spend it wherever I want it feels like it’s mine and not Starbucks’.
As long as you understand how to protect yourself against inflation, you can at least take responsibility for it. BTC offers a way out, but unless it is aligned with each country’s democratic process.
CBDC will likely use a central database, so it is very different from blockchains from a governance or democracy and control standpoint. A wholesale CBDC, which is an account between a commercial bank and the central bank, is probably a good thing. This can increase efficiency in bank-to-bank payments, such as across borders, and can be a useful addition to the guarantee of stable coin reserve funds. It is clear that each transaction will have its own stable coin where it can be settled also with digital real and all other stable coins from outside the country depending on where you have your account. Brazil will be ahead of many other countries and this will make our economy grow exponentially, as long as fintechs 3.0 have a great support also inside the country and not only outside.
BLOCKBR is a fintech specialized in tokenization infrastructure and digital asset investments that was born with the culture and mindset of Web 3.0. Its mission is to pursue a direct relationship with its customers, with maximum efficiency and compliance in the industry. In this way, the company is betting on decentralization, speed, veracity, and immutability of data to reduce costs and ensure more efficiency without intermediaries in financial processes. With a multidisciplinary team grounded in the legal, financial, commercial and technological areas, BLOCKBR not only digitizes financial assets, but also transforms physical assets into innovative and profitable businesses through tokens. The goal is to provide infrastructure for the market and to create financial products in a decentralized way, expanding distribution channels and increasing liquidity through supply.
