"What's that you say? Aren't we supposed to be destroying the old financial markets and introducing a new era?"
Well, yes and no. What I'm sure everyone is in agreement on is that its the costs, inefficiencies and traditional power complexes in the outside financial industry that are becoming obsolete. However, it's important to not throw out babies with the bathwater, so to speak. Modern financial markets have created solutions to many economic problems. Rather than reinvent every wheel and spoke, we should at least take note of what works in financial markets, and seek to replicate that in some modified or improved form. Especially as that's how many people will transition over.
So I'm looking at all these intellectual battles in the forum around how bitAssets should be structured, including my own head-banging, and thinking "the modern financial industry doesn't just have one way for people to invest in an asset, but many ways, each designed to meet different needs". So why are we all arguing? Maybe we should all be working together to design everything we want, but not all in one "holy grail" bitAsset package. Maybe we just need different instruments.
Let's look at a sample of offerings in the modern financial industry, using gold as an example:
- Physical gold is like a substitute money. You hold it, and pay holding costs directly. Its difficult to do, inconvenient, and possibly only used for large financial transactions, but secure.
- Gold-backed currencies can be used as money. They are highly convenient, liquid, and transferable. (if they currently existed)
- Futures on gold allow you to trade it with leverage, subject to margin calls, and regular expiries. Its easy, and requires little capital, but you bear the risk of contango/backwardation.
- CFD accounts with long gold allow you to trade with leverage, subject to margin calls, but no expiries. It requires little capital, but costs you in spreads and funding rates.
- Exchange-Traded Funds (ETFs) on gold allow you to hold it as a long-term investment, as part of a shared pool, with holding expenses paid from the pool and adjusting your exposure over time. Its convenient and easy, but its not leveraged, and cannot be used in transactions.
These are not the only ways of investing in gold. Now if you look closely you can see that many of the bitAsset debates are really about features a bitAsset should provide. But the perfect set of features we are arguing over are never seen in the external world in a single package.
So I'm proposing we move the strategic debate in a different direction...What are the building blocks to offer a suite of markets aimed at different needs? And where do we start, recognising that not everyone's needs can be met from that starting point.
(Of course, we can start "everywhere all at once" if we like, if we decentralise/privatise the development process as I have just suggested in another thread.)
I'd also be inclined to begin this process before
we have a final solution to the issue of a stable currency. Stable currency is a hard problem. I'm convinced we will find the right answer eventually, but I do now think it's holding us up from exploring all these other profit opportunities. Who knows - maybe the optimal solution to stable currency will present itself by surprise as we let design freedom and the free market do its work.