What is a ‘Pure Currency’?
Pure Currency is a form of currency which is created using pure mathematics, with no bias to any particular entity, person, or company.
The first ‘Pure Currency’ that humanity ever created was Bitcoin. Bitcoin has no bias toward any human being, it does not even know what a human is. Bitcoin only knows mathematics, and it operates in a completely mathematical digital environment. Bitcoin is only awarded to accounts which provide solutions to math algorithms and there was no initial Bitcoin that existed or that was given to anyone.
For the first few years after the dawn of cryptocurrency, all cryptocurrencies were ‘Pure Currency.’ Each was distributed via pure mining which meant that each was a fair, open commodity and all people were on an equal playing field since all people have freedom to seek electricity and mining hardware.
Since the dawn of Ethereum ICOs, many new ‘tokens’ have launched in a completely opposite manner, locking out all people from the profits and instead only allowing the 1%, the founders and secret investors the ability to reap the growth. These ‘Monarchy Tokens’, upon deployment, assign all of their token balance to a single person or entity. This entity then decides, in an offchain and centralized way, how to distribute the tokens. Typically this is done using an Airdrop or an ICO and typically 30% or more of the tokens are kept by ‘the team.’ This is because they are greedy and know that they can get rich quick with little to no actual work. These tokens are not Pure Currencies.
Monarchy Tokens: OMG, EOS, ADA, TRX, ICX, ZIL, BAT, FUN, and any other ERC20 token with this line of code which assigns all tokens to the owner:
balances[owner] = _totalSupply;
Many Ethereum enthusiasts have caught on to this and have started seeking more decentralized and open alternatives. How can we build Pure Currency inside of Ethereum? Some would argue that there are a few examples already:
- wEth, Wrapped Ether, is a psuedo-pure currency token since it is a token which was never all assigned to a single owner. Instead, it is just a proxy token with a 1:1 ratio to Ether. It is only created when Ether is locked up, and burning wEth unlocks the Ether.
2. Dai, Tokenized USD, is another psuedo-pure currency token. It was never all assigned to a single owner either. It is just a proxy token with a 1:1 ratio to USD. It is created using CDP loans based on the value of USD which is determined using multiple oracles in the MakerDAO system.
3. 0xBTC, the first Pure Mined Currency for Ethereum, is the first pure currency for Ethereum. It is a new implementation of the Satoshi Bitcoin Whitepaper as an ERC20 token. It is not tied to any other asset, it is only pure mined.
It is very unhealthy that ‘Monarchy Tokens’ distributions are set by the same people who benefit (the founder) as this is an enormous conflict of interest.Of course they would give themselves 30% or more of the initial token distribution. A digital landscape covered in Monarchy Tokens is no worse than Fiat currencies, since they are all majority-controlled and owned by central reserves.
Pure currencies like Bitcoin and other pure mined assets give us the opportunity to create something better. Pure currency tokens give no bias to a founder or a team or any person, they are only based on mathematics. Instead of a huge and unreasonable bias given to the entrepreneur, there is an even playing field for all.
