These techniques work for currencies and smart contracts that hold private currencies. Modern cryptography allows for confidential transactions (a third party cannot deduce how much was transacted) and anonymity (a third party cannot determine the participants in a transaction). The use cases are distinct from payment networks such as Visa, which are efficient today in the developed world. The initial utilities are cross-border payments, transferring assets out of the reach of a government, and transferring wealth in large sums. Potential stores of value such as Bitcoin, Chia, and Coda are decentralized, uniquely seizure-resistant and non-sovereign, and exhibit many of the other requisite properties of stores of value. #MONEY STACK CODE#Smart Contracts - code that can own, transfer, and manipulate money will result in better derivatives, lending, escrow, securities, REITs, insurance, and other instruments Privacy - a better way to do offshore banking and store assetsĬ. Store of Value - cryptocurrencies may offer a novel, non-sovereign store-of-valueī. We classify Programmable Money via three novel utilities over other forms of money:Ī. Similarly, to understand which Programmable Monies emerge as winners, we start by analyzing their foundational utility. When gold was established as a store of value, few alternatives existed with the same utilities. Gold is inert, has industrial applications, is used as ornamentation and ceremonially, and historically had signaling value. Though market prices for stores of value are reflexive and reach an equilibrium over time, they are rooted in utility. Programmable Money Winners Will Be Rooted in Unique Utility Programmable Money is New Technology Driving Novel Utility #MONEY STACK SOFTWARE#In addition, crypto firms must be able to self-custody a diverse set of assets and write software to participate in the market directly (staking, helping secure early stage networks). “Companies” in crypto can be liquid tokens, illiquid tokens, equity, or equity-token hybrids. The technology-driven nature of Programmable Money suggests assessing these assets via deep technology diligence (running protocol nodes, auditing code bases, meeting technical teams) and early-stage market analysis (user and network adoption, exchange utilization, etc.). Investing in the Programmable Money stack requires an early stage technology mindset and specialized firms. Companies built on these tokens can transform industries yet to be disrupted by the Internet. Programmable Money tokens can earn a premium on their utility as non-sovereign, monetary stores-of-value and touch trillion dollar markets in securities, derivatives, and banking. The largest market size is for cryptocurrencies and companies in the Programmable Money category. “Programmable Money” is the foundation of a multi-trillion dollar new technology stack. These smart contract platforms will often have strong regional network effects due to their interaction with regulation and regional norms. Instruments for derivatives, securitization of assets, lending, escrow, and insurance can now be expressed as software code.
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