Fourth, a comparison between DW20 and the standard currency, the U.S. dollar

Enter the white paper series3

We start to unveil the mystery of the chainless system and introduce the relevant contents of the white paper. Many programmers have had close encounters with Bitcoin and ended up empty-handed. We are destined to meet each other and believe wealth is proportional to cognition. Our airdrop design does not require you to spend money, but you must spend time reading articles to improve your cognition and contribute to your strength; otherwise, you will miss wealth.”Comparison of the decentralized standard currency DW20 with Bitcoin, the stablecoin DAI, and the standard currency USD” is divided into four sections: the design background of DW20; its comparison with Bitcoin; its comparison with the decentralized stablecoin DAI; and its comparison with the standard currency US dollar.

Comparison of the decentralized standard currency DW20 with Bitcoin, the stablecoin DAI, and the standard currency USD

Fourth, a comparison between DW20 and the standard currency, the U.S. dollar

DW20 has passed the stable currency stage and entered the standard currency stage. The comparison object now is the U.S. dollar, the leader of the standard currency. The standard currency is a currency with pricing power. It is the pricing unit of goods, the standard for pricing. What conditions must currency meet before it can be used as a yardstick for pricing?

1. It cannot be limited, but the total amount issued is subject to inflation.

2. It must be stable, and there must be no short-term fluctuations. Quantitatively speaking, the volatility of currencies is 20-50 times lower than the volatility of stocks.

3. There is an important settlement volume in global trade.

Under this condition:

1) the standard currency must have a floating exchange rate,

2) not be linked to any currency,

3) circulate globally,

4) be freely convertible.

There are many fiat currencies worldwide but very few standard currencies. Judging from this standard, the RMB is not a standard currency, the Hong Kong dollar is a pegged stable currency, and the U.S. dollar and the euro are standard currencies. The British pound and the Japanese yen also meet the above four criteria, but the global trade settlement volume is insufficient.

The market price is DW20. Like DAI, its pricing refers to the U.S. dollar but is not pegged to the U.S. dollar. It can circulate globally like cryptocurrencies and be freely exchanged within the coin circle. DW20 already has the primary conditions for a standard currency. The question is whether it can achieve important global settlement volume. It is not yet known. Because once it reaches such a large amount, it is not only determined by economic factors, but it would also be great if it could reach the level of the Japanese yen and the British pound.

There must be a road before the car reaches the mountain. The current stablecoins have begun to be widely used in some small countries, which can avoid being cut off by big countries. However, as long as it is a pegged stablecoin, it can still be cut.

The Bitcoin standard establishes a bubble-free financial system. You can refer to the relevant content published on the chainless website (chainless.hk), as well as the series “From a peer-to-peer cash system to a bubble-free financial system” and “Bitcoin dollar standard” articles.

Satoshi Nakamoto studied the shortcomings of gold and legal tender issued Bitcoin and established the prototype of the Bitcoin standard – a peer-to-peer system. After that, the cross-chain of cryptocurrency, the practice of Ethereum/smart contracts, and stablecoins constituted all the technologies required for Bitcoin standards, completing all preparations from thought to technology.

A bubble-free financial system does not require an issuing institution like the Federal Reserve. There will be many standard currencies similar to the DW20 principle to compete with legal currencies and the Federal Reserve. The author’s “Bitcoin Dollar Standard” series of articles (chainless.hk) repositions the Federal Reserve. In the future, will the Federal Reserve dominate the world, will Bitcoin dominate the world following Hayek’s theory of free monetary competition, or will multiple currencies divide the world? It’s hard to predict. Because there is no pure market competition under political power, even the best economic and technological means will give way to strength. There is no natural path to Bitcoin-standard. Bitcoin standards are also what Bitcoiners strive for. The ideal state that people think of is never something that can wait.

The Bitcoin standard is more scientific and advanced than the U.S. dollar standard. For example, the issuance of currency by the Federal Reserve is manually adjusted, and the market adjusts the currency price. That differs from the DW20, where the market automatically adjusts issuance and currency prices. The Federal Reserve’s legal currency issuance is based on economic forecasts, which are usually made artificially and are therefore not necessarily accurate; the issuance of DW20 currency has nothing to do with economic forecasts and relies on the more accurate principle of market negative feedback. The short-term and long-term volatility of DW20 will be much smaller than that of the U.S. dollar, and the market will naturally choose a ruler with high accuracy. Zhou Xiaochuan, former governor of the People’s Bank of China, believes that “creating an international reserve currency that is decoupled from sovereign countries and can maintain long-term currency value stability, thereby avoiding the inherent shortcomings of sovereign credit currencies as reserve currencies, is the ideal of the reform of the international monetary system.”. Obviously Mr. Zhou Xiaochuan does not want the U.S. dollar to dominate the world. Not being linked to any sovereign currency and not controlled by any country is Mr. Zhou Xiaochuan’s ideal, and it is also the common ideal conveyed by Bitcoin and DW20. DW20 and Bitcoin together constitute the Bitcoin standard, which is the ideal solution that humans can see that may replace legal currency and correct the shortcomings of legal currency.

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