So one of my acquaintances asked me
“What is the value of Ethereum ?”
A quick answer that I could give was “Its about 147 USD today!”
Woah wait, could I have not said it better? I could have.
I immediately realized that I was still anchoring to fiat to define the value of ETH. A small moment of thoughts over it and I realize that I went to an easy answer that was available to my mind, probably that availability heuristics playing games with my mind. I could do it better, I could have explained it better.
Blockchain like bitcoin or Ether can help people shift to a new paradigm of economy, which would not be necessarily based on fiat. The value of fiat is not because of consensus, there’s no full-engagement in its value formation, and hence it should not be deemed as rational tool for economic purposes, but again, that was what available to the world until recently.
I realize that I am not the only one who has been thinking Blockchain coins in terms of fiat. It’s everywhere, however it doesn’t save me from the issues it brings, nor it changes the situation, even if i realize the truth about our judgement. The issue is a bottleneck that’s going to be difficult to overcome.
To imagine a world where everything is traded in cryptos seems very causal as we move into the crypto space, provided that all players play nice and fair, with the best intent to the world, but this is not the truth. The public however mostly come back to fiat to value the crypto, which is not the best thing one could do.
What would we need?
Consensus that the value of the coin not be fiat-dependent. If the community goes back to fiat every time to evaluate the cryptos, nothing has really changed, the situation has not really changed, but only some tools or perception of it. This is not going to shift the reality. So, a consensus is need that defines the value of the cryptos by itself, and not be based on some fiat.
Who decides the value of a coin after ICO has done? The CEO of the project who unleashes it to the world, or The board members? On what metrics are these evaluations based?
The value should be defined by the community. When a company does their ICO, it seems for the fundraising purposes, its values are predominantly fixed. However, some coins are into the market whose value does not exist at the present moment, and they’ll be judged by the public for a long time until they create some utility. It is a clever of a leader to not suggest people speculate on his platform. Later when utility is added, the tide can turn for itself.
Lets imagine a community of diverse people. Let’s imagine it is 10 million people. Now lets imagine they are a self-sustaining community. What I mean by self sustaining is, should there be ONLY 10 million of these people in the world, they are supposed to be capable enough to help each-other to fulfill their needs of life like food, cloth, and shelther, and other needs of life. These people actually exist, but they do not have a common place to vent, they are separated by some controllable variables. The venting platform can now be based on a universal crypto. And this community needs to AGREE that they’d need start trading with each-other ONLY in cryptos. When such a community quits fiat and accepts a crypto, the community should survive with whatever the medium of trust they agree to use. With fiat, its value is possibly influenced by systems outside the community, but now with crypto, the community decides the value of its medium of trust. I don’t see a place where fiat has a future in such community.
This will require that a diverse groups of economic players should collaborate to bring it to life.
So its hard to play the crypto game in real life right now, hard is not impossible. In an attempt to earn quick or some other reasons, some people have lost significant money , and some have earned a lot from the misfortunes of others. To see how such a community of people would come to a consensus, a simple game could be designed where users/agents can play by proposing a certain number of cryptos to certain goods. Imagine a game where you get to choose to evaluate the items you’d need to consume in daily life in cryptos.
Should we continue believing the idea of the value of cryptos in fiat, like everyone seems pushing it so hard ,and traders flooding into the space to make profits, marketers doing it wrong ,and the voices of real crypto advocates being slowly dampened, the tide will turn around for fiat for its own good, and humanity as we know of will lose this great opportunity to turn things around for a better world.
So who’s going to be the anchor?