The Rise Of Decentralized Networked-States And The Lessons We Need To Apply

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LeoFinance
7 Min Read
1307 words

As they say, the world is going to hell.

The most recent bit of news has Argentina's economy in collapse (for the umpteenth time). This follows in the footsteps of Sri Lanka. Unfortunately, the story is not likely to end here. We are going to see more situations like this as economic conditions get tighter.

What is at the root of all this is a convoluted story. However, we can take some things away that can be applied in our creation of decentralized networked-states.

Web 3.0 offers potential like few imagined. The path laid by the likes of Facebook give us some insight into what can be created. Of course, the challenge with the way things are is the lack of inclusion in the monetary rewards.

This is what Web 3.0 is meant to alter. Nevertheless, there are some lessons we should take from the events of the world. This will help us to navigate some of the pitfalls.

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Build The Economy

We live in a world of financialization. The power of Wall Street and its cohorts is immense. For this reason, we see many who believe we can operate outside the business cycle. After all, advancement in mathematics and financial products allows us to overcome this ancient concept.

Unfortunately, it never seems to work. The boom-bust cycles are still with us, only seemingly worse.

One of the problems appears to be the notion that money is wealth. This is where some of the trouble starts. When financial matters consume a society, then the real economy gets overlooked. Wealth is business. When economies has strong economic output, they are more stable and resilient.

Certainly finance and banking plays a role. Yet, that was grossly distorted in the last few decades.

The role here is to provide the resources for wealth generation. This means providing the mechanisms to allow commercial engagement.

We see this being played out in the cryptocurrency world. How many projects are focused on this, utilizing proven business building techniques? Instead, we see many toying around with the tokenomics in an effort to make price go up. While rising markets can be helpful in resource generation, if it is the sole end, when the bear comes out, things get bad.

This is another thing we are witnessing. Those projects that have a plan are expanding and growing. It is something that comes from development. Over the last few months, we saw a lot of the highly leveraged, Wall Street-type companies and funds enter bankruptcy. Once a liquidity crisis hit, they were cooked.

Of course, we saw the same behavior as banks. Stop withdrawals to try and avoid collapse. It doesn't work.

The key to any successful Decentralized Network-State is the economy that is built.

Why Pegs Do Not Work

Money, finance, and economics is a confidence game. This is why when people lose faith in the government, the economies go right along with it. This collapse ends up leading to hyperinflations because the governments and central banks always follow the same playbook.

Pegs are meant to instill confidence. Naturally, there is a practical application in terms of exchanging, swapping, and trading. However, most times a peg is put in place to give confidence in the currency.

We see this with stablecoins. They are being pegged, mostly to the USD, for a couple reasons. One is to provide a unit of account that is understandable as well as consistent. The second reason is to provide confidence in the stablecoin by tying it to something that people know.

This is not enough. It is a beginning but requires a great deal more. Eventually, the peg will fail because the economy supporting the currency does not warrant it. In the case of countries like Argentina, they can peg to the USD all they want. When their economy returned to shambles, the peg was snapped. There is no way to maintain it without a solid economic basis.

Over the last few months we discussed the idea of adding value to the Hive Backed Dollar (HBD). This is what needs to be done with a currency. While pegging is a good option, and markets can handle it for a while, the long game necessitates doing those things which will provided the ultimate in confidence: strong economic output tied to the currency.

Digital Nations Offer A New Structure

Is it possible that the digital world becomes the starting point and all flows out from there? Could we see digital nations that are the root for the physical world we live in?

The answer appears to be in the affirmative. We know the power of companies such as Facebook, Amazon, and Google. Their revenues exceed the GDPs of many nations. Decentralized Network-States are the next evolution from there.

We have the opportunity to, due to tokenization, create actually economies surrounding the money we create. This means looking at what needs to be done in the area of currency value.

In the past we covered 4 areas where focus is required:

The last one on the list is how we develop a powerful economy. When financial matters are undertaken, not for the sake of simply making money, but to have the resources to expand the economy, this is where a transition is made.

Cryptocurrency can offer the resources to provide real services that are required for economic expansion. Right now, since we are housed mainly in the digital realm, we see developers paid in exchange for the work they do. This is allowing vital infrastructure and basic applications to be built.

We can then start the process of constructing shops along with other commercial use cases. This is another standard of digital economics. Of course, since it is the Internet, advertising of some sort will come into play. This all adds to the utility of a token.

Finally, we have to apply the value in other areas. Consider all we can provide utilizing cryptocurrency. The Hive Borehole Project is a prime example. Here we see this funded through the use of cryptocurrency. The payment from Hive is made in HBD. The end result is a physical system that was created from the value of a digital asset.

A Game Of Confidence

Many believe in Hive. This is another word for "having confidence". Blockchain by design helps to provide this. Through the transparency, we can have faith in what is taking place. It is in the open for all to see.

At the same time, success stories like Hive Borehole help in the "resume" of the system. What did the ecosystem accomplish? This is an answer that most anyone can relate to.

A lot of what was done is serving as a foundation of the Decentralized Network-State we are creating. There are tools being developed to provide online marketers with what they need to connect with people. Rewards are being distributed for providing information to Hive's database. An application like Podping is feeding half a dozen applications with updates of new podcast episodes released. Games are being built, an industry that is worth over $20 billion per year in the United States alone.

We know valuations in the digital world can increase rapidly. The network effect is such that expansion is radically different in the bits and bytes realm. They are easier to deal with than atoms.

For this reason, the Decentralized Network-State of Hive simply needs to keep growing the economy. We can place with monetary matters all we want. Fortunately, the lessons are all around showcasing how that turns out.

It is best to learn from the failure around us.


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You're right, when you talked about a game of confidence. Many believes in the exponential and prospective growth of Hive and everything it can futuristically offer. This gives it a sort of value even in the toughest of situations.

You talked about Argentina, I never knew a shitty economy could depeg a currency

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Yeah which is usually preceded by a collapse in confidence in the government. When people believe the government is failing, they make different economic and financial decisions.

Then we have an economic collapse, the peg in a currency can be lost as the external financial community loses confidence.

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You know I am on this band wagon with you. It's been EXTREMELY hard to get people to use their crypto in commerce. So building the economy part needs to be more than just financial instruments.

I get comments all the time, "Oh this is great", or "This is what Hive needs is retail and commerce" yet it's rare we get any purchases, and people are still buying everything from the big corporations with their fiat money. Hell most of the posts on Hivelist are for contests and giveaways.

NFTs felt like they were going to help boost some commerce a bit, but then we see how that has gone, lol.

So yeah, just trying to figure things out on that end, but when you have Walmart and Target coming out saying things aren't looking good for them, then us small timers are screwed. But that is where the idea of building us an e-commerce economy was coming into play.

The problem is when people want to hoard their coins because we have gotten into this number go up and give me something for nothing mentality, they don't want to use these assets for what they were meant to be used for.

Hive is different than HBD. We need to be using HBD, or hell even BUSD, USDC, DAI, or even USDT for the commerce side of things. Not the base layer assets, because people want those for staking, or whatever they think it will do for them.

Now that you can earn the good interest with HBD, people aren't wanting to pay with that now either, lol...

I guess in my rabbit hole, early morning ramblings, I am trying to basically say that we need to get off the financial instrument focus, because most average people don't care about that kind of stuff and get back to a peer to peer commerce and payment system that can work outside of the traditional system.

But I guess I am a dreamer at this point, lol.

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I agree with you. The use of cryptocurrency is limited simply due to the fact that most look at it like stock. They believe we are going to see mooning so they HODLer.

Hell we built it into our terminology.

Stablecoins offer a much better solution. This is where we can see a major difference enter. However, it takes people changing their behavior.

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Exactly. It's going to take time. People want stuff done in a week, but it doesn't work that way. Just going to take more education. So let's start the Stablecoin Revolution, Task, lol. 😎

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Financialization.. good word!

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There are many paths we can take on Hive, the only thing we shouldn't do is repeat the mistakes of governments and banks 🤣.

I like the idea of using HBD to pay for layouts, design and other types of art, I believe that creating ways to facilitate this "trade" would greatly encourage the commercialization of HBD.

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All viable use cases and payment mechanisms for HBD. Over time, we will start to develop an economy around what we are doing.

It looks like it will be slow going but that is the way it is.

First we need to get the resources in people's hands.

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The most recent bit of news has Argentina's economy in collapse (for the umpteenth time). This follows in the footsteps of Sri Lanka. Unfortunately, the story is not likely to end here— the recent economy collapse in both countries just shows and exposes the many hidden excesses of a centralized systems.

decentralized platforms will fill in the position of hyper-political tools, capable to manage social interactions on large scale and dismiss traditional central authorities eventually.

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That is true although decentralized systems are rare and very few at the moment. But we have to start somewhere.

It is all a building process.

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Thanks for sharing this sir. I wish you a happy weekend.

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Hive Business Center

I created this community to educate people on HIve about businesses on Hive, where HBD is accepted as currency. I agree that true value is derived by utility in economic ventures. The success of Bitcoin in the Bitcoin Beach Communities was not the magic of Bitcoin, it was the magic of commerce. because the communities agreed to only use Bitcoin as currency, the communities money stopped flowing out of the community and instead around the community. People performed work and provided goods and services for Bitcoin. Businesses created jobs, people created services, the effect of Bitcoin was more due to it's peer to peer nature without middlement, which allowed unfettered commerce. I believe that if the Hive Community becomes educated about these things the potential of HBD is very great, and the potential of the communiuty will be greatly enhanced. Hive Business Center isn't very glamourous, but I think it could be very important. It's the boring stuff that really has an effect.

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The entire financial system is just a game of confidence but I don't think we will see a decentralized system for a few decades. People don't change fast and they still have the USD to rely on.

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