Encrypted World: "Inception" in the digital currency "Matrix"
Editor's Note: This article comes fromMoneyness Institute(ID: moneyness), Author: Pan Chao, Head of MakerDAO China, released with authorization.
Editor's Note: This article comes from
Moneyness Institute
(ID: moneyness), Author: Pan Chao, Head of MakerDAO China, released with authorization.
Those who are familiar with "The Matrix" and "Inception" must be deeply impressed by the "double world" and "multi-layered dreams" in the movie. Similar ingenious ideas connect reality, dreams and subconsciousness, and each layer overlaps In-depth and sympathetic, the viewers are overwhelmed.
This "multi-layered space" is an excellent reference for understanding the relationship between the complex and delicate fiat currency system and digital currency.
Modern currency is distinguished by two important "totems" - cash-based "legal currency" vs. virtualized "digital currency".
"Fat currency": Issued by the central bank of the country, it has unlimited legal compensation and exists in the form of banknotes and coins (ie cash).
"Digital currency": issued by banks or private institutions, all forms of non-physical currency.
They represent two dimensions: sovereignty and individual, public and private, scarcity and mobility, discipline and resilience. Just like the "matrix" and "Zion" in "The Matrix", but in the "matrix" of digital currency, we can also build multiple levels of space and create a "chaotic domain" "outside the system" — encryption world.
For most people, legal currency is the "real world", and various digital currencies are superimposed on it as a "virtual world" (or dream). To enter each layer of dreams, you have to use auxiliary tools, and returning from the dream to reality requires "synchronizing" multiple parallel time-space "serial exits" or "telephone booths" in the matrix.
When people deposit banknotes at the bank counter and turn them into a string of numbers, they enter the "Dreamland". If the balance of the bank card is transferred to WeChat or Alipay, etc., it will sink into the "second-tier dream". Unlike cash, which needs to be delivered face-to-face, digital currencies can flow freely relative to each other and are no longer constrained by space. However, in order to get cash back, one must withdraw layer by layer, withdraw the cash to a bank account, and then use an ATM to cash out. The two layers of dreams are also areas that most people can enter and exit.
This is already a complex "dream within a dream" structure, but at the "edge" of human consciousness, an unstructured world without a "dream master" is sprouting. After the "implantation" of a Bitcoin with no specific physical form, this network grew rapidly and extended a free land.
It is not a simple operation for ordinary people to dive into the deeper world. Existing channels are often not applicable, and special "sedatives" are required.
"Tranquilizer" not only allows participants to live in another time and space, but also be independent of the constraints of the real world.
In the story of digital currency, "stable currency" takes on this function. The virtual currency exchange facilitates the transaction of traditional funds and encrypted assets through the bridge of stable currency, and allows people who want to get in touch with the encrypted world to travel freely in the "offshore" port of their "three-tier dream".
Unlike the previous two levels, being in this dream level comes at a price. Because it is impossible to return directly to the legal currency world here, it is necessary to coordinate the time of multi-layer dreams and exit in a row, otherwise it can only stay in the exchange or fall deeper into the chaotic domain of cryptocurrency.
"Inception" uses music to synchronize (Synchronize) time. For legal currency and cryptocurrency, Synchronizer is the interweaving of exchange rate and parity. The exchange rate is the price of the stablecoin anchor target fiat currency and the local fiat currency, and the parity (Par) refers to the price of the same currency at all levels. In other words, although the face value of the stablecoin is the same as that of the U.S. dollar, in the actual market, due to the different conditions of the level, there will be premiums and discounts. Only when the exchange rate and parity are consistent (eg. X domestic currency = 1 USDT = 1 USD exchange = X domestic currency), can hedging be perfect.
Layer-by-layer traversal is not the only way to enter the encrypted world. As a powerful and expensive "dream machine", the "mining machine" can directly connect the "real world" and the "encrypted world".
Different from the "real world", there is no "dream master" in the encrypted world of "chaos", and it is in a "collective unconsciousness", relatively unstructured and disorderly state. What constitutes this world are the ideas shared by human beings, such as the pursuit of decentralization, the protection of privacy, the struggle against central monopoly, and so on.
Here, any participant can break the laws of physics, create buildings unrestrainedly, and even recreate "multi-layer space" (Lightning Network, side chain, cross-chain). Not only "space", but also "time" in the encrypted world is not bound by the real world. Of course, all of this is not without trade-offs. Disorderly markets, limited resources, sudden drop in security, fragmented information, and easy-to-lose self are the shortcomings of this world.
"However, for people who have been in the encrypted world for a long time, the "dream" has become a reality."In their view, the fiat currency world is a rootless and illusory existence, and the "currency standard" is a new yardstick for measuring value.
This goes back to the topic that humans have explored for a long time: what is the "totem" (anchor) of currency?
