——Comments on the concept of DW20 standard currency
“Comparison of decentralized standard currency DW20 with Bitcoin, stablecoin DAI and standard currency US dollar” is divided into four sections: the design background of DW20, comparison with Bitcoin, comparison with decentralized stablecoin DAI, and comparison with the US dollar. This article also comments on this order.
DW20 is a decentralized standard currency. There is a difference between standard currency and stable currency. Not all currencies are standard currencies. Only the US dollar and the euro can be considered standard currencies. Its meaning is that it has the function of pricing commodities, that is, the function of currency ruler.
In the Bitcoin dollar standard, Mr. Zhu designed UDAI to correspond to the US dollar. The currency is issued by mortgaging Bitcoin, and the issuance principle is similar to the cryptocurrency DAI. DAI was initially anchored to the US dollar, a stable currency. Dai has its flaws. A centralized institution is needed to handle DAI, and this institution must make a profit, so a fee is charged for pledging Bitcoin or Ethereum. DW20 is an application project for the chainless platform. It is a token issued using the Bitcoin BRC20 protocol. There is no fee for pledging.
DAI and USDT are centralized stablecoins, while DW20 is decentralized. RAI (Reflexer), the most similar decentralized stablecoin to DW20, is called the “ideal type” of decentralized stablecoin by Vitalik. However, it lacks an application scenario similar to chainless and a DW20 stabilization mechanism, and its price cannot be stabilized. Its price on Coinmarketcap on September 24, 2023, was $2.74. RAI has been issued for over two years and has achieved less volatility than Ethereum, but whether it can become a market-recognized stablecoin remains to be seen. I think it is unlikely because it is not based on application scenarios.
The design of DW20 contains profound financial principles. DW20 has three stages. The consensus stage is the token growth stage. Satoshi Nakamoto’s Bitcoin also has this stage of about 48 years. At this time, the coins are basically issued. However, due to Satoshi Nakamoto’s insufficient understanding of currency, the currency value cannot be kept stable after the release is completed. Bitcoin does not have the characteristics of a currency ruler, so its final status is a stored-value currency. DW20 makes up the currency ruler function it lacks. The second stage of DW20 is the stable currency stage. By mortgaging Bitcoin to issue coins, the increase in quantity produces price stability. When the volatility is less than the US dollar, it is the third stage of the standard currency stage. This design is very clever, and not all cryptocurrencies are designed this way. Many similar cryptocurrency projects in history have the problem of an incomplete understanding of finance.
Due to its complexity, understanding DW20 can be challenging. However, Mr. Zhu has taken steps to bridge this knowledge gap. He has invited friends to write four simplified white papers and several comments, providing valuable guidance for readers at different levels of understanding.
The development of cryptocurrency began with David Chaum. The second milestone was Satoshi Nakamoto’s Bitcoin; the third was Mr. Zhu’s Bitcoin Standard. The chainless platform becomes the main payment and settlement system, realizing Hal Finney’s wish to make the Bitcoin system the main payment system.
In the first release of Bitcoin, Satoshi Nakamoto said that he hoped that Bitcoin could solve the problem of excessive money issuance by the central bank, and it has been solved. Secondly, it solves the bubble lending of commercial banks. I agree with Mr. Zhu’s opinion; half of it has been solved. There is no bubble on the chain, and the bubble still exists when off-chain. The third problem is that it cannot solve small payments, but DW20 can solve it.
There are similar cryptocurrency projects, but they cannot compare with Mr. Zhu’s design.
Using DW20, Bitcoin can be based on the US and Hong Kong dollar standards. That is, the world is no longer the world harvested by the US dollar. Power returns to the people, which is the fundamental meaning of the Bitcoin standard.
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