It's 10 years in the future.
@Ethereum and
@CelestiaOrg are the dominant L1s. Optimism and Fuel provide on-demand rollups and modular execution environments for 10,000,000 of users.
Instead of utilizing banks, most individuals interact with Open Financial protocols for their everyday needs. Fiat, money by decree, is still around but the landscape is shifting.
“Fiat money is a type of currency that is not backed by a commodity, such as gold or silver. It is typically designated by the issuing government to be legal tender.”
@optimismFND rollups are generally used for Open Finance hyperstructures with hard money principles i.e. near-instant debt settlement, collateralized speculation and other financial instruments that use real-world indicators for value accrual. Inherit to hard money is small discrete time ranges (1 - 15 seconds) and minimal "virtualization" of speculation in the form of debt. Hard money rollups prioritize tighter feedback loops and accurately representing the state of the world as it today.
@fuellabs_ modular execution environments are used to abstract/virtualize Open Finance protocols with soft money principles i.e. localized fiat currencies, fractional reserve credit lending and other financial instruments that use abstract indicators for long-term value generation. Inherit to soft money is unbounded discrete time ranges (15 seconds to 30+ days) and abstract virtualization of value in the form of speculation. Soft money execution environments prioritize longer feedback loops and coordination games that speculate on the state of the world as it should be tomorrow.
🧠Enter the Thought Experiment
For just a moment I'm going to play fast and loose with definitions of "hard" and "soft" money since it's my thought experiment and you're invited to come along for the ride :)
Hard money can be defined as real financial indicators for the state of the world as it is today.
Soft money can be defined as abstract financial instruments to bet on (and arrive at) a desired future.
Hard money enables value accrual in real-time and soft money enables speculating on value creation in the future. Put another way, hard money is the physical gold humanity has been mining for the last 2,000+ years and soft money is the futures market started in the 1930's to insulate farmers from risks in emerging global markets.
“An agriculture commodity future is a contract, traded on an organized market called an exchange, whereby a specific quantity of a certain subset of grades and quality of a natural raw product (such as wheat or cotton) can be contracted for at a set price in advance of its delivery.”
One might even consider the transition for the gold standard to the fiat standard, in the 1970s, as a bridge between modern hard money and soft money principles. Even Ethereum's recent upgrade from proof-of-work to proof-of-stake shines light on the idea of hard and soft money principles playing out exclusively in virtual environments.
And begs the question... Would it have been possible for Ethereum to start out as a proof-of-stake network and forgoing its proof-of-work phase? I would argue no... The bridge from physical to digital (literally buying GPUs and working to secure a network) acted as an essential "hard" money financial instrument required to bootstrap the Ethereum network at that time.
As the saying goes... Timing is everything.
Whether you agree with the transition from the gold to the fiat standard, it can be argued it was a required abstraction for moving into the Digital Era of value creation. Gold as a hard money standard had reached its maturation and we collectively needed a new financial instrument to "upgrade" the value humanity had amassed/accrued up until that point in time.
Now, let's move onto doing some future world building.
Click below to read more...
mirror.xyz/kames.eth/8SqDiMe…