Some years ago, the only currencies that existed were the different state currencies. Until then in history, money was in constant evolution. It evolved from many variants of metal coins, to bank notes and to digital money. A whole field or research has been dedicated to the study of money. What happens when money is printed? What happens when money circulates faster? How does the money supply affect the overall economy? These are just some of the questions that this scientific field tries to answer.
for simplicity reasons, I use in this article the term money and currency as synonyms. However, both terms don't exactly have the same significance.
For very long, there was a lot of theory about money and only central banks and governments could actually try out these theories in reality.
This was the case, until crypto was invented....
The crypto world has become an amazing playground for testing money theories
There are literally thousands of crypto currencies and tokens in existence today. Each of these tokens has it's own tokenomics.
When we look at the tokenomics of a token, we look at it's distribution, it's backing, it's supply, it's governance and it's use cases. A token is defined by its tokenomics. It defines how the token is created, who will hold it, how the supply will evolve. Who decides if changes should be made and how it can be used.
In this respect a token is not different from the money that states and nations emit.
Every token tries to be the perfect money
When tokens are created, the people that are behind the project try to create the perfect money or a type of money that fulfills a certain role. With every token that is created, we learn something new about how money behaves. We learn what makes a token lose value. We learn why the distribution matters. We learn that tokenomics need to be changed over time and realize the challenge that lies in defining who has to take the decisions for these changes. The whole array of scientific theories are tried out in the virtual world of crypto.
No limits to creativity
When we look at all the Defi projects that are evolving around us, we see an amazing creativity in how different tokens are combined to create value. Often it's not just one token that is involved but a more or less construct of different tokens combined. There are no limits in how creative such projects are becoming.
Will we get the perfect money?
When looking at how the crypto world is experimenting with any type of money concept, we could think that one day we will discover the perfect money.
The crypto world tends to teach us that we will probably not have one perfect money but a multitude of different tokens and coins that have each their use cases and specialties. These tokens are either in competition with each other or even in synergy as the example of liquidity pools proves.
The process is well on the way. We see innovation every day. New ideas and projects are being tested and in the end the best ones will prevail. The crypto world allows to test the theories and allows us to evolve towards a system comprehending a multitude of different currencies and tokens. I believe it's pretty exciting to be in this crypto world and to look at this evolution every day...
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