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How the Bitcoin and Ethereum economies shape their culture

6 min reading

Every cryptocurrency together have the power to form a community of its own and create new form together.

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Cryptocurrencies are cryptocurrencies. This culture is expressed in different ways, but the main form of cultural expression is economic. Every blockchain is an experiment in the economy and the standard society that will create that economy.

The most famous and most famous experiment is Bitcoin. Satoshi Nakamoto introduced Bitcoin with the term "electronic money". Bitcoin was originally presented as fixed money that had properties like cash and properties like gold due to its consensus mechanism. Bitcoin will act in parallel as a medium of exchange and store of value. Nakamoto exhibits cipherpunk and libertarian instincts. Properties like money in digital money guarantee secrecy - in theory at least - and properties like gold guarantee scarcity. Reduction of Return on Block Rewards implies sending a maximum of 21 million Bitcoins.

The history of money has varied circumstances. Many users have not used Bitcoin for its intended purpose and have chosen to use a centralized exchange as their wallet, which undermines privacy. The rise in the price of Bitcoin also ensures that no one spends it on coffee. We see bitcoin as money in places like El Salvador, but perhaps at the expense of controversy as non-state money becomes state money. Another cultural problem is that it is a monetary network with an immutable monetary policy. The fact that there will only be 21 million bitcoins has prompted a subtle belief in what I call monetary minimalism. 

Also read: Three types of crypto investors

Monetary minimalism places money management in a decentralized software system and minimizes human intervention outside of system maintenance. In order to initiate a change in monetary policy, for example increasing the maximum supply of bitcoins, the majority of stakeholders will need to adopt new consensus rules. It is possible that Bitcoin culture could develop in this way, but at the moment a radical change in monetary policy is very unlikely. As Bitcoin users are attracted to it as an alternative to money managed by fiat currency systems, this situation means that Bitcoin is no longer the Bitcoin it was originally intended to be.

Ethereum's economy is an interesting contrast to Bitcoin's monetary minimalism. It's important to say that Ethereum is not about business, especially in today's hostile environment. In contrast, Ethereum is essentially a distributed global computer with its own local currency. However, it can be presented as a kind of home for the large token economy built on it: DAO, DeFi, NFT (or decentralized autonomous organization, decentralized finance or irreplaceable token).

Ethereum's native token, Ether or ETH, is presented more pragmatically on a white paper. It has a "dual purpose". The first is to act as a “liquid layer that enables efficient exchange between different types of digital assets”. The second is a small amount, called "gas", required to make transactions or to implement and use smart contracts. Ether is functional and, in the modern sense, more like money. Its productive use allows the expansion of economic activity.

Since the Ethereum project is not money oriented, we find that ether is discussed more as a management tool. Ether doesn't have a maximum amount - it's not designed to be a storehouse of libertarian value - but emissions are reduced many times over and the burning mechanism of ETH (EIP-1599) has some deflationary effects. In this case, the local currency has either managed to overcome the current technical challenges or is gearing up for a longer-term upgrade, such as the transition to The Merge (an upcoming update that will bring Ethereum to a new consensus mechanism called Proof-of). - bet). This is a form of monetary minarchism.

Also read: Compromised hot wallets from BSC, ERC-20, and Polygon cost AscendEX $80M Loss

Monetary monarchy allows the management of a limited world computer local currency to improve the world computer. The competitive business vision offered here in my opinion is temporary. Bitcoin, as author Lana Swartz puts it, is a “social theory” that includes the collapse of the fiat system and Bitcoin as the beneficiary of this collapse. Bitcoin is presented as a hedge against what society sees as the contradictions inherent in fiat currency. In this story, it is unavoidable.

However, the modern bitcoin community does not suggest this as an immediate concern, but rather as an event on the horizon. Therefore, the task of Bitcoin users is to give up now - save, save, not spend - to take profits later (reversal of preference theory over time). Following an accumulative strategy, the "Hodler" stereotype may seem almost evangelical to outsiders, and the emphasis is on the salvation of hermits. However, with interest rates rising, it could be argued that the deflationary alternative to Bitcoin could become increasingly attractive to the general public.

The Ethereum economy has a faster pull. Since Ethereum is a meta-economy with smaller sub-economy (DAO, DeFi, NFT), it offers another way to avoid economic stagnation. Ether has the characteristics of earning assets, where you can find attractive jobs (DAO), attractive interest rates (DeFi), and scarce digital assets (NFT). This productive position - the stereotypical "sword" - may seem almost meaningless to outsiders and an emphasis on irresponsible spending, but with the economy stagnating, Ethereum's earning alternatives could become increasingly attractive to the general public.

Monetary minimalism and minarchism are different, but it is good to remember that they are on the same side, as opposed to a fiat monetary system.

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