March 28, 2024

Evolution of money: Cryptocurrencies

Today, many people feel that in our world (and in the world of money as well) “something is wrong,” but they cannot understand:what exactly, what is the reason and where are we going? Let's try to clarify the situation by taking a quick look at the history of mankind, money and cryptocurrencies.

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Evolution of people and money

Appearing at the dawn of humanity asmedium of exchange, money changed with people, serving the growing needs of growing communities. The groups united into tribes, then into settlements, later into cities, and finally into states. In the course of their growth, communities became more and more strong and competitive, and interactions within them, including economic ones, began to acquire an ever larger scale, diversity and significance.

At each new stage in the development of civilization, moneyalso evolved - they became more and more functional, changing to meet growing needs and solving additional tasks more and more efficiently. Money has become the main instrument in such important processes as trade, savings, lending, investment, taxation, regulation, etc. Currencies issued by governments have also become a key control and management mechanism, both domestically and internationally.

To understand the current situation, it is important to realizethat the evolution of man for millions of years took place in the conditions of a fierce struggle for limited resources, during which individuals and communities won, who most successfully took resources from nature and from competitors. Wars did not stop on the planet for a minute. Obeying primitive instincts in defending the interests of their groups, people have traditionally caused damage to competitive communities, while the majority sacrificed their personal interests for the survival of the group as a whole.

Over the past decades, the technological levelhumanity has grown many times over, but people themselves are not able to change as quickly. Religions and states manage to correct to some extent the inherited “wild” behavior of the population, which makes it possible to build larger, more creative and effective communities. But, unfortunately, it is too early to talk about significant successes in this area. A quick change in external attributes (dropping spears, putting on ties, etc.) does not block, but only covers the deep instincts that served as the basis for survival for millennia.

As a result, we have a picture of blatantinefficiency on a global scale, when internal contradictions more and more impede (rather than contribute) to further development. At the same time, a significant part of the total potential is spent not on creation, but on destructive confrontation between people and groups, traditionally striving to win in the evolutionary race at the expense of neighbors. In ancient times, such behavior helped people to survive and improve in the conditions of small competing societies, but today it also prevents us from joining forces in the format of a single global community.

Is it possible to eradicate this primitive instinct?destruction (in conditions of globalization &#8212; self-destruction) and move to the next stage of development? This problem needs to be solved as soon as possible so as not to perish in the fire of increasingly destructive means of confrontation. It is necessary to build new collective security systems in all key areas (including in the world of finance) using modern tools emerging as a result of technological progress. The results of the implementation of the Internet and decentralized technologies for effective interaction based on it demonstrate the enormous potential of this area&#8230;

It is impossible to predict the future, but it is obvious thatmoney should, as always, have time to change after all other changes. Outdated payment systems have always lost their role, and new ones have come to replace them, capable of solving the whole range of urgent problems. Now it is already difficult not to notice the obvious discrepancy between the current financial system and the direction and dynamics of general development. If in areas such as health care, crime fighting, arms control, etc. nations manage to jointly develop new decentralized mechanisms of collective security, then its users are not allowed to participate in changing the existing financial system.

Why did it happen? Let's get back to history.In the twentieth century, the world of money has undergone more significant changes than in the entire previous period. For centuries, silver and gold played the role of the generally accepted monetary equivalent, but the physical limitations of their large-scale use made it difficult to service the growing economy. In addition, the authorities have always been interested in replacing hard-to-control gold money with a variety of paper substitutes. The unlimited emission of "paper money" and the possibility of manipulating the precious metals market made it possible to deprive gold of its monetary functions in favor of the so-called fiat currencies, which are "backed up" only declaratively.

The permissiveness that resultedconcentration of power among issuers of key fiat currencies has given rise to a number of negative processes &#8212; games with interest rates, credit adventures, stock exchange fraud, currency wars, real wars, etc., subordinating world finance (and through it the economy and politics) to the interests of the “new elite”. Today, the world financial system has largely transformed into a global system of taking resources from neighbors on the planet, in which many “vassal states” are becoming poorer and losing the remnants of their independence. All this leaves no hope that the financial elite, acting in its own interests, is interested in improvements and is able to solve the problems it has created.

In fact, the whole world is offered, likeclients of the only bank, remain passive users and rely on the conscience of those in whose hands the power is concentrated. Such a hierarchical imbalance cannot last forever, and sooner rather than later it will lead to the migration of users to alternative decentralized instruments of financial interaction that can honestly respect the interests of the majority of participants in the system. And the longer this problem remains unresolved, the more painful the inevitable transition to a new monetary system of the next generation will become, capable of solving all the accumulated problems. However, it is not known when and how this will happen.

But there is good news &#8212;Technological, software and cryptographic innovations in recent years have allowed enthusiasts to develop their own models of payment systems. Programmers joined forces to create cryptocurrencies &#8212; alternative non-state currencies with their own monetary unit, issue, infrastructure, etc. Cryptocurrencies, even at their “infant” stage, have managed to prove their viability in practice - thousands of people and organizations around the world are already using these technologies, and the market capitalization is stably maintained at around several billion dollars. Cryptocurrencies are becoming, along with the Internet, part of a general trend towards the liberation and unification of people within a single community.

The emergence of cryptocurrencies. Bitcoin.

In 2008, the first cryptocurrency began to develop— “Bitcoin.” The concept of a decentralized payment network he proposed is so different from older solutions that improving it and unlocking its potential will take some time. All other innovations, such as electricity, cars, airplanes, mobile communications, the Internet, etc., were similarly adapted for mass use. Freedom of movement, communication, etc., which until recently seemed like a fantasy, has today become a reality, directly or indirectly improving the lives of everyone. The main value of cryptocurrencies is that they provide another degree of freedom &#8212; freedom of personal finances. The widespread adoption of this technology will lead to a series of significant changes in many areas.

Omitting the technical details, Bitcoin candescribe as an electronic payment system that uses its own limited emission currency (a diminishing production model like gold) and operates through its secure, decentralized network. The Bitcoin network automatically certifies transactions, while security and reliability are ensured by the use of cryptography and modern information technologies. Before the advent of Bitcoin, the work of all payment systems was based on the authority of a central trusted authority (bank, payment service, etc.), which opens accounts for clients and certifies all their transactions. Thus, in the banking system, transactions are performed when they are confirmed, secured and executed by banks. At the same time, users find themselves in complete dependence both on the banks themselves and on all higher-level organizations. Money in the banking system can be tracked, blocked, seized, eroded by inflation, etc.

The situation is different with Bitcoin.Its technology made it possible to abandon the certification of transactions by intermediaries &#8212; All transfers are decentralized and verified by the Bitcoin network itself, which operates in a distributed manner, similar to torrent networks. The Bitcoin system does not belong to anyone, its users have equal rights, and the program code is open and publicly available, which guarantees independence, fairness and security. To open an account and start using Bitcoin, users do not have to reveal their identity or obtain anyone's permission - they simply need to connect to the Internet and install a wallet program. Moreover, all transactions are carried out directly, which means they cannot be blocked, etc. There are opportunities to exchange Bitcoins for national currencies, as well as direct payment in stores.

Bitcoin's independence eliminates outside influenceon the operation of the network and is the basis of its key advantages over the banking system. The emission schedule of new Bitcoins is algorithmically fixed for decades in advance, excluding uncontrolled inflation typical of fiat currencies. The absence of intermediaries means zero or meager transaction fees, and the continuous operation of the network guarantees users automatic transfer of any amounts from anywhere on the planet to anywhere within 10 minutes &#8212; without intermediaries, restrictions and risks. Recently, this was difficult to even imagine, but now it has become a real opportunity for everyone who has access to the Internet.

However, even in the ingenious concept of Bitcoin withlimitations and shortcomings come to light over time. This is normal, because it is impossible to create an ideal sustainable system on the first try. The developers have already eliminated many of the problems of Bitcoin, and some of the shortcomings were corrected by connecting third-party elements and services to the system (at the same time, it took some deviation from the principles of decentralization and independence that underlie the success). But there are still such limitations, which are either difficult to overcome, or possible only through various "tricks" that do not correct, but cover up the fundamental shortcomings of the system.

So, the flip side of high reliability andThe stability of Bitcoin is the low adaptability of its architecture, which imposes restrictions on the further development of the project. Over the past years, the Bitcoin network has improved mainly only the basic functionality, and most of the new features have been added due to the launch of external centralized "add-ons". But despite all the conceptual limitations, today Bitcoin functions reliably, is widely known and remains the most popular and demanded cryptocurrency.

Additional information about Bitcoin &#8212; https://bitcoin.org/ru/

Evolution of cryptocurrencies. Dash.

Some enthusiastic developers, inspiredsuccess of Bitcoin, they did not limit themselves to the narrow framework of its architecture, but launched alternative cryptocurrencies with changed parameters and operating principles. But it soon became clear that it was impossible to gain popularity only through “cosmetic” improvements to the Bitcoin source code &#8212; it is necessary to offer users fundamentally better solutions. Of the several hundred alternative projects, only a few have what it takes for long-term development and success in the “great cryptocurrency evolution.” Among them, the “Dash” project, launched in early 2014, is especially noteworthy.

The Dash developers took the Bitcoin code as a basis andare developing their “ideal cryptocurrency” &#8212; "Digital Cash". First of all, the concept has been improved. For the sustainable functioning and development of any cryptocurrency, the coordinated work of many interconnected systems and processes is required: maintaining the network infrastructure, providing computing power, financing development, promoting the project, etc. Effective self-regulation is necessary, because problems with any of the key processes slow down and jeopardize the entire project. The Bitcoin model is too simplistic and only rewards those network participants who provide cryptographic protection (the so-called “miners”). At the same time, the remaining components of Bitcoin remain without system support and function arbitrarily. The advanced Dash concept includes decentralized incentive mechanisms and auto-tuning of all important elements, which improves the stability and survivability of the project as a whole.

Then, the technology itself was improved.At the heart of all of Dash's key benefits is its two-tier distributed network architecture. The traditional single-tier Bitcoin network is capable of performing only the simplest slow operations - once every 10 minutes, a consensus is reached and verified transactions are recorded in a distributed ledger of transactions. Dash's two-tier network works in a different way - protected network nodes can reach consensus continuously, in real time. This allows the introduction (without violating the principle of decentralization) high-speed protocols, which opens up new opportunities that are unattainable for conventional cryptocurrencies.

On the basis of this platform, suchpopular processes such as Anonymization of funds (third-party observers cannot track transactions, balances and payment history of users), High-speed transactions (full confirmation of transfers in 5 seconds, like bank cards), Voting (decentralized management of the development and financing of the project). In the future, the capabilities of the Dash two-tier network can be used to implement solutions such as Distributed storage systems (transaction lists, registers, messages, etc.), Distributed application systems (exchanges, stores, services, etc.), third-party support projects, etc.

The future development of Dash will be determinedthe voting system being introduced now. This unique tool in the cryptocurrency world will allow Dash to take full advantage of the benefits of democracy by leveraging the resources, knowledge and experience of community members. Anyone can put forward development proposals, justify a budget, and receive targeted funding if the community approves of their initiative. Talents will be able to self-actualize, while receiving not only moral, but also monetary satisfaction. In the same way that communities with democratic principles inevitably outpace dictatorships, Dash will be able to evolve more efficiently than other cryptocurrencies that severely restrict their development.

Thus, instead of creating a cryptocurrency withwith a limited set of certain functions, Dash creates a platform that is maximally adapted for the further effective development, adaptation and promotion of any new cryptocurrency technologies.

Additional information about Dash - https://www.dashpay.io/ru/

There are other interesting cryptocurrency projects that offer different implementations of payment and support systems.

Conclusion.

Finding more effective and less destructiveforms of development directs the progressive part of humanity along the path of unification into a single community, an important element of which is the world of finance. However, the current financial system does not contribute to this, but throws the world into a barbaric past, with constant wars and mechanisms of control, suppression and enslavement of both individuals and entire states. The evolution of money can transform it from an instrument of dictatorship to a means of achieving financial freedom, independence and efficiency.

Newly emerging innovative technologiesmade it possible to create alternative money - cryptocurrencies, which can become a global independent instrument, limiting the power of the current financial elite. Due to their decentralized nature, cryptocurrencies do not require anyone’s permission and can work everywhere, but the issue of their large-scale application is more a social issue than a technical one. People need to learn about emerging alternatives and not be afraid to take advantage of them. Awareness of alternatives &#8212; this is the first step towards liberation, and wide discussion helps this realization.

The more people learn about cryptocurrencies, thesooner all the improvements associated with them will be able to come into our lives. If the topics raised did not leave you indifferent &#8212; Share the link to this article with your circle.