The Distribution ProblemsteemCreated with Sketch.

in cryptoeconomics •  2 months ago 

The biggest problem with the present financial system comes down to distribution. By this I mean how the money that is generate is distributed and where it ends up.

For this reason, I feel that crypto-economics offers a much better solution.

When we look at the existing structure, it all starts with the banks. The Central Banks decide to expand the money supply, believing they can "manage the economy". When they do this, where does the money go?

Through their process, the money is distributed to the banks. Thus, what the central bank creates does not go directly into the economy. It is up to the banks to determine if they lend it out or not.

Unfortunately, banks are never going to act in the interest of the masses. Self-interest means that, when things are going bad, the banks, like everyone else, will be in cash. Loans are not offered freely in economic collapses. Naturally, this is when they are needed the most.


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The money that is created ends up padding the bank's reserve fund. They accumulate interest on money they were freely given. When things do get better, they will lend to those qualified, tying people up with debt.

With technology, the secondary layer gets even worse. The present system relies on the trickle down effect. When banks lend money to a company, it is for the reason of business expansion, which should generate more and higher wages.

The last two decades proved this not to be the case. Instead, it was Wall Street that profited as automation enables profits margins to be enhanced by eliminating personnel.


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Crpto-economics offers a much different distribution plan. As opposed to putting money in the hands of banks or corporations, a crypto system can put money in the hands of individuals. This is a much different concept that alters the flow of funding completely.

Each token in a wallet is a new token. From there, people are free to use it as they see fit. In the early stages, our options are naturally limited. However, over time, as infrastructure is built out, we will see the opportunities for each individual expanding.

As more layers are added, the possibilities keep growing. Individuals are able to select those projects that interest them while having an effect upon said platform. Over time, the number of tokens individuals are holding grows. Hopefully, the projects are a success, thus increasing the wealth of these individuals.

We watched the present financial system grow over the last 100 years. Crypto-economics is in effect roughly a decade. It is truly in the last 5 years that we saw projects arising that can benefit the masses. Now, as we multiply the number of tokens being distributed, we have the opportunity to leverage the network effect. This could radically alter the pace of development in this industry.

It is through a mechanism like that we see exponential growth take place.

That is an opportunity that millions are going to need.

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I've noticed that the Gini coefficient of a project is roughly tied to the performance of its token, LTC and DOGE being the best examples of such.