The Horizon of a New Economic Paradigm for Transferring Value

Last Modified:11 Nov 2022 09:06:36
The Horizon of a New Economic Paradigm for Transferring Value

by Pooyan Ghamari

Founder & CEO | Counos Blockchain Industry

 

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          There are numerous economic apparatuses that govern the global financial system. The result of millennia and centuries of different economic schools has gotten us thus far to where we are right now.

          The major purpose of any economic system is the transfer of value. People want to transfer value among themselves and in doing so be able to acquire goods and service from one another.

          However, the current status quo with regard to this global economic apparatus revolves around centralized systems of conventional banking and other financial organizations that are almost always held by a certain power, certain group of people, or a certain government.

          What does this mean for people who are using such system for the transfer of value? It means that they are at the mercy of these systems.

          But could there be an alternative to these conventional systems? This is exactly what I intend to illustrate in this article. First the idea of money and value transfer will be explicated. Then we will take a look at the history of financial trades and how they are carried out today. And finally, we will see how it is plausible and feasible to have a new system for monetary and value transactions that are outside of centralized banks, organizations, governments, and fiat money.

 

What Is Money?

This is the most fundamental question that needs to be answered first and foremost. Out in the economic ether, the idea of money has been twisted and turned. Such that rarely do we think about it.

Essentially, money is a vehicle for transferring value.

Suppose for instance how our conventional fiat money system works. For example, when we purchase US dollar we give the value and asset that we have to the United States Reserve Bank and instead we get a paper bill for that value, which is of course US dollar.

The same is true for other fiat money and fiat currencies around the world. Imagine when we purchase Euro or any other fiat money, we are in fact providing the value or asset to that international or national organization or institute, so that in turn for the value that we have provided we can get a piece of paper, which is the bill, so that we can use that for easy transfer of value.

In such systems of value transfer, all the people who participate are at the mercy of the group, organization, or the governments that are in charge of the system. They can change the amount of asset and value and essentially take it higher or lower. This is how the value of fiat currencies get higher or lower every day.

Now, of course there are some fiat currencies that are more stable because of the organization or government that is in charge of it, such as Swiss Franc, which has almost always been considered one of the most reputable and reliable fiat currencies in the world.

But on the other hand, there are other fiat currencies that are not doing so great. For instance, we all know what happened to Euro recently, that for the first time in decades its value got lower than the US dollar. But there are far worse examples, such as what has happened to the fiat money of countries like Venezuela or Iran.

So, this is how fiat money works and this is how fiat money can be basically manipulated and become extremely volatile.

 

History of Value Transfer

          Our economic systems and the multiplicity of the methods that we incorporate in the transfer of money around the world could be regarded as relatively new, especially with the incorporation of various technologies. How did value transfer take place in the past?

Since long ago, the way business and trades worked was based on a trusted party.

Imagine in the past there was a trusted part. Now, someone would come and give them their gold and in return they would get a receipt for that gold.

That receipt for gold would then be used as the vehicle for transferring value in an easy way without having to transfer the gold itself. Then they could give that receipt to anyone else for their trade and business. And finally, the last party could go to the trusted party, provide the receipt and get the gold from them.

But as time went by and as businesses and trades grew larger and larger, people would not actually come and get the gold. They would just leave the gold with the trusted party and merely trade with the help of that receipt.

This receipt for gold would be traded many times between people for various goods and service.

This was the way for transferring of value until the idea of modern banks and financial organization came fore.

 

New Paradigm for Value Transfer

So, we saw how fiat money works and how value was transferred in the past without banks and how it is transferred today with the help of banks and government organizations.

But is there a way to get away from banks and centralized organizations such as governments, treasuries, and reserve banks? Essentially, how can we trade value without fiat money?

The way this system can be possible is if an organization or a company can store gold and equal to that gold would sell the value and asset to people and offer them a receipt for that gold. And that receipt can be used to get this gold

In this system there is no need for a fiat money or national money. Because the assets can be transferred and traded without the help of fiat money. People would give their assets such as gold, car, precious assets, etc. and get a receipt. Then use that receipt to trade with anyone they want. Finally, that receipt can be used to get that asset.

In such a system, there is no longer a need for banks and conventional monetary systems. It’s only the organization, the other party and the gold.

Now there can be a system that can transfer and exchange gold with commodities and digital currencies, and in this system there are no banks and fiat currencies

This is how the easy, simple, and reliable transfer of value would be possible in the proven way without the manipulation of banks, governments, and fiat money.