The cryptocurrency community continues to discuss the behavior of real-world assets during a market depression caused by COVID-19. Here’s what Block.one’s CTO had to say.
Daniel Larimer, Creator of BitShares and Steem and CTO of the Block.one team behind EOS.IO open-source software, shared his philosophical thoughts on how the states affect the accessibility of scarce assets.
Who is to Blame for Empty Shelves?
Mr. Larimer highlighted that the shortage of any asset, in particular scarce goods, is the result of government inaction into a free market system. An ‘economically ignorant population’ is just one more aspect of state-backed intervention since these people are educated by the same state.
Mr. Larimer emphasized that as this supply/demand disproportion increases significantly during a time of crisis, there is a use-case for blockchain-based systems. He mentioned Bancor Protocol, one of the unique decentralized money projects with an unusual dynamic reserve ratio.
Within this scheme, the adequate liquidity is guaranteed by the system of interconnected smart contracts.
Why is Bitcoin (BTC) Different from Gold (XAU)
Daniel Larimer admitted that the most popular ‘safe haven’ assets are not delivered quickly, especially in developed economies. However, if the market forces was not stopped by a government intervention, then these goods could be shipped instantly.
Yet, the actual situation is quite different. Mr. Larimer compared this to the hypothetical two to three months required for the confirmation of a Bitcoin (BTC) transaction. Thus, Bitcoin (BTC) is one of the few assets with a velocity unaffected by state power.