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Bitcoin Studies: Finding Nakamoto Satoshi【12】——Realize the Solutions of Bitcoin Dollar Standard

ZWS(Zhu Weisha), a Famous Chinese Entrepreneur

Economists describe the problem; entrepreneurs solve it. The Bitcoin system is ugly as hell in the eyes of technologists because deviance does not fit the theory, but it does work. Bitcoin dollar standard idea is also repulsive in the eyes of economic and financial experts; it does a job.

12.1 Bitcoin standard in the face of hard times

In Sections 10 and 11 of this paper, we discuss the flaw of credit currency, the flaw that is caused by the central bank mechanism. As previously described, central banks are not capable of stabilizing the economy. The central bank policymakers, like us ordinary people, are there to adjust empirically based on some unreliable data, acting as a command flag, and the public runs in the direction of the command. The economy moves in the direction of the central bank command. Some people say to put a monkey there; the command effect is not very different. We know against totalitarian rule, but let the world turn according to one voice? In fact, the central bank has a confusing role and is burdened with a lot of work that does not belong to it.

What is the real job of a central bank? The job that central banks can do, the irreplaceable, is only one: to fulfill the responsibility of the ultimate lender.

In the case of a liquidity crisis, asset prices fall below their intrinsic value. If the economy is left to recover naturally, the cycle is long social wealth loss is significant. That's when it makes sense for the central bank to step in and fulfill its lender-of-last-resort responsibilities and bail out financial institutions through high-interest rates. It is its proper business. In addition, the central bank cannot assess the human factor of the data due to the limitations of the data collection method, and this is the principle of the inaccuracy of measurement tells us that economic stimulus by the central bank using monetary instruments based on unreliable data is often overshooting and causing more excellent economic shocks. It is effective in the short term but highly harmful in the long term. The economy has its natural development; just like Bitcoin, there is no one strong man to intervene; everything develops naturally. It runs on endogenous mechanisms. The social system is a collaborative system, much more complex than the Bitcoin system, and should develop naturally, with minimal human intervention under normal circumstances.

Human is a product of nature and should follow nature's evolution. The emergence of fiat currency is to solve the defects of the design of the gold standard system; the problem of the gold standard is reserves and value ruler as one, gold is both reserve currency and value ruler. Gold limits economic growth when the amount of gold mined and the economy are out of sync, i.e., the economy is growing faster than the growth rate of gold mined. The Bitcoin standard system does not suffer from this flaw. Bitcoin is endorsed as a reserve currency to issue stablecoin based on the dollar price, separating pricing from reserves, which has been successful in blockchain experiments. There is a stablecoin, DAI, in the blockchain that is issued with Bitcoin collateral, and the DAI is equivalent to the U.S. dollar. When Bitcoin falls to the compensation line, it is necessary to cover the position, and when it reaches the closing line, it is required to close the position. The project is called Maker Dao (1), and the logic has no problem. The problem is that the blockchain delays the confirmation, making it impossible to close positions on time. If a transparent, centralized system without time delay is used, this problem does not exist. It is the second layer of Bitcoin's technology. See literature (2) for the system design, which is designed to overcome this drawback of the Maker Dao. This way, the principle of the Maker Dao can be scaled entirely up to the whole financial scenario.

The gold standard has flaws, and the Achilles' heel of fiat currency is incomplete asset backing. The incompleteness of fiat currency backing is explicitly covered in the next section. Let's conclude here that the ancestor of fiat currency is the Chinese Song Dynasty “Jiaozi," which eventually failed. The fiat currency will also share the same fate as the Jiaozi.

The operating mechanism of fiat currency initially had its rationality and smoothness, and the economic stimulus policy became a panacea. However, all stimuli do not deviate from the same thing: short-term effects and long-term ineffective. In words, people can understand that no matter what method is constantly blowing up the balloon and maintaining the balloon, an ICU patient must continue to rescue; this rescue is exponential growth. U.S. government debt, a clear-eyed look at it will know that it can not pay back; borrowing new to pay off old debt continues to blow up the bubble. To this day is:

"1. central banks no longer have the capacity to deal with the scale of money and finance accumulated because of the central banks themselves.

2. the complex world financial system formed and solidified by financial globalization transcends sovereign borders.

3. finance has become an independent industrial sector beyond the real economy." (3)

Central banks themselves constitute the most unpredictable element of the economy. It must solve the above three problems simultaneously. First, the most challenging problem to solve is the central bank's debt. The solution to this problem depends on Bitcoin. Second, because the U.S. dollar acts as a trans-sovereign currency, the U.S. dollar is the actual local currency ruler or value ruler for global finance. It is a strength of the dollar, but the Federal Reserve does not assume the responsibility of the ultimate global lender. It is a problem that needs to be fixed and improved. Third, the function of central banks and the profitability of commercial banks are narrowed. It is also among the solutions to this scenario. This solution solves the three fundamental problems of modern finance mentioned above in one fell swoop.

Because of the U.S. debt, the U.S. dollar as a value ruler has been repeatedly questioned by countries worldwide. Just as the blockchain's aircoin keeps squandering credit damage consensus, the Federal Reserve's credit is being blown continuously, and the consensus is disappearing. Financial globalization will collapse if it is not solved. In order to stop the collapse of the dollar, there must be new resources to repay the debt of the United States while transitioning the credit dollar to the asset dollar, the bitcoin dollar. As we mentioned earlier, we want Satoshi Nakamoto to show up and donate his coins to the Federal Reserve, which is used to accomplish the two purposes of dollar debt repayment and Bitcoin standard.

What is the Bitcoin standard? It is the Bitcoin dollar standard, which is the issuance of Bitcoin dollars with a Bitcoin backing. Bitcoin as the reserve currency and the U.S. dollar as a value ruler turns the U.S. dollar from an indefinite tax backing, i.e., credit backing, into an endorsement with an already definite asset, and the asset-backed is the rarest asset of all, Bitcoin, which exceeds gold! Therefore, using the rise of Bitcoin to recover the credit debt of the dollar simplifies the central bank's responsibility, which operates Bitcoin to form a strong dollar standard, which is what the Bitcoin dollar standard, or the Bitcoin standard, is all about.

The Bitcoin standard will inevitably bring about a monstrous wave in the financial system. Satoshi Nakamoto opened Pandora's Box, a blockchain box where fraud and innovation are intertwined, allowing the world's people to rethink money's true meaning and role from another perspective. It opened the door to a new monetary system for humanity. Debt is not formed in a day, and it will take a long time to achieve the Bitcoin standard, with the first point in time 36 years from now, after 12 cycles of Bitcoin. At this time, a modern financial system based on Bitcoin should be initially formed and established. The second point is 76 years later when people have adapted to a Bitcoin-based financial system and established new credit and ethical standards and consumption habits based on the storage of asset values. It will take 132 years to develop into the Bitcoin value ruler. One hundred thirty-two years is theoretical, is it needed? Don't know. See the following section: "Bitcoin's Natural Growth Curve." The bitcoin value ruler may advance; the prediction is just a statement.

Cryptoeconomics differs from economics in that the emphasis is on having a feasible solution.

12.2 Plan preparation

1. Satoshi Nakamoto donates no less than 1 million Bitcoins to the Federal Reserve.

2. Bitcoin holders set up a Bitcoin Stabilization Fund with 5% of the total number of Bitcoins to be run by the Fed.

3. The Fed uses the Bitcoin holdings to issue a Bitcoin dollar UDAI equivalent to USD.

The blockchain has good practice for this. For example, Maker Dao uses bitcoin as collateral to issue a stablecoin DAI value ruler in USD. Maker Dao has done an excellent job. However, they've experimented with all the detailed logic; we need to refine and add features.

4. Change the unit of Bitcoin, and expand by 100,000 times.

Move the decimal point of a bitcoin number 6 to the right; one bitcoin becomes 100,000 bitcoins at this point, less than 1 dollar a price. It is estimated that for another 36 years, the price will be between $100 - $200. The second is the point in time, 76 years if the bitcoin value ruler is reached early, at which point the bitcoin decimal point has to be moved another 3-4 places. Set to 1 UDAI. The USD no longer acts as the value ruler, and the UDAI becomes the neutral global value ruler. In one hundred thirty-two years, Bitcoin is mined out, at which point the number of Bitcoins is stable.

Is bitcoin deflationary when it's mined out?

According to current mainstream economic theory, this would bring about monetary deflation. But would absolute stability be deflationary? Theoretically, no. Because the current dollar as a value ruler of measure does not affect global economic growth, the various currencies now in global circulation are not necessarily pegged to the dollar. If the current monetary order is not changed and the market freely chooses to peg to the dollar, it will maintain the existing financial order.

The current financial system's solution to deflation is to increase the issuance of fiat currency. The Bitcoin standard is different, as Bitcoin's absorption of USD causes Bitcoin price to grow, further pushing up Bitcoin and automatically releasing more UDAI, which is different from Maker Dao. And UDAI maintains constant price stability. With absolute stability, even if the USD is abandoned, there is no contradiction; unlike gold, a reserve currency and value ruler are together. Taking a precaution here, the change here seems simple. Still, it is a fundamental change in the structure of central bank coinage, just as Satoshi Nakamoto's distributed coinage structure changes David Chaum's centralized structure. The system structure has changed and must be reconstructed in all theories. You can't use traditional approaches to judge right and wrong, or you'll conclude that Bitcoin is "ugly." For example, some people say that Bitcoin mining is a waste of energy, but this is the source of the scarcity and value of Bitcoin. Getting a Bitcoin right now is already very expensive. The cost of Bitcoin will rise along with the price of Bitcoin.

5. Specific Approach

By replacing the status of the Maker Dao with that of the Federal Reserve, the Maker Dao approach can be extended to the entire financial scenario. The Federal Reserve issues a Bitcoin UDAI secured by Bitcoin. This UDAI is equivalent to USD. It can be circulated similarly to the USDC issued on Ethereum. But Ethereum, no matter how much it is changed, is still not fast enough to catch up with Paypal and, therefore, not structurally competitive. We need a centralized platform that is transparent throughout to work with UDAI. See literature (2) for the solution. Blockchain technology makes it clear how much bitcoin the Fed has and how much overissuance is clear.

12.3 There are three types of UDAI issuance

12.3.1. The Federal Reserve coin issuance model

It issues the corresponding Bitcoin-dollar UDAI based on the number and value of Bitcoin holdings.

As early as 1694, the Bank of England had a principal amount of 1.2 million pounds, and it was subsequently allowed to issue 17 million pounds of banknotes on top of that principal. This limit was breached. Because gold was an anchor object, its price was constant, limited by the amount mined, and gold was in short supply. By 1844 the Bank of England's issuing liabilities had reached 850 million pounds. (3) Bitcoin was not limited in its rise, and as long as its rise, there was room to issue Bitcoin UDAI, which remained anchored to USD, thus avoiding the dilemma of gold Value ruler; the approach makes the USD go from a credit backing to an asset backing. The credit of the USD is enhanced. The current financial system is not affected.

The idea of this design is:

See the original requirement for the correspondence between the Bank of England's principal and paper money, which was more than 14 times equivalent to 7% of the bank's reserves. The same as what is required of commercial banks today. For Bitcoin, a new thing, referencing the year's history, the Fed was also given the right to double the issuance of Bitcoin in its hands. Still, all the distribution was for one purpose only: to fulfill the Fed's role as the ultimate lender. Due to market problems, asset prices are far below their value when a local economy is functioning. The Fed can bail out in the following way: the Fed can then issue additional currency, a "dummy" currency without any asset backing, and when the Fed uses the new "dummy" currency to bail out, it will cause the value of the bailed out party's assets to return. At this time, the bailed-out party accepts loans at high-interest rates to restore the intrinsic value of undervalued assets, and the "dummy" assets issued after the return are to be withdrawn quickly. Then, through interest, the Fed takes a share of the recovery in value.

Similarly, the profits are used to repay the dollar debt. Suppose it is not enough to issue more than double the principal. In that case, it has to fit into the "four corners relationship" designed by the U.K. (3) As history progresses, we have the community factor. Community discussion of significant issues is one of the reasons why Bitcoin is still standing. Should add this point to the scope of the community's responsibilities in the new Fed. How to constitute a community is another question. A secret discussion in a small area is less advanced than the community model.

The argument between the fiat and gold standard lies in the fact that gold as the unit of denomination limits economic development, and if gold is used as the backing to issue coins, central banks are concerned about the lack of gold in their hands and the market can not verify the amount of gold in the hands of the central bank, can not do so transparent and verify the credibility of bitcoin backing. The biggest problem with fiat currencies is the lack of credit, and giving fiat currencies with scarce assets to supplement credit, through a long time to complete this credit replacement. Retrofitting dollars is the easiest and least painful way to do it.

12.3.2. The Federal Reserve Escrow model

Mass users pledge bitcoin to get UDAI at a 75% collateralization rate. No interest. There is a 5/1000 handling fee on redemption. This collateralization is a smart contract in the Maker Dao and fully applies to the Federal Reserve. Using the literature platform (2), you can write an actual artificial intelligence program far more than a blockchain smart contract. As Bitcoin rises, the Fed automatically assigns the mortgagee the UDAI corresponding to the up portion at the end of the year. On the downside, it will ask the user to cover the position when it reaches the cover level. If the position is not covered, the value corresponding to the collateral is automatically forfeited and becomes the source of the Fed's bitcoin. It is the model where everyone can issue coins, and the Fed is the escrow method. This collateral rate increases further with the stability of Bitcoin. Exactly how much depends on the volatility of Bitcoin transactions, the amount of USD the Fed wishes to absorb, and the wishes of the Bitcoin community.

The rationale behind the design of this point is that:

For the mass of users, there are just three uses for currency: buying physical objects, preserving value, and increasing value. The people want to invest because deposits that do not retain their value. Forcing the people to become financial experts or leeks. If saving money preserves its value and increases the currency, why invest in anything else? The USD is used to buy Bitcoin to keep and increase the currency's value. This method is safe and profitable and will constantly absorb USD from the market and exchange it for UDAI use. Corresponding to a 75% collateralization rate, its absorption rate is 25%. Thus UDAI must be expanding, and USD must be contracting. Is the economy necessarily deflationary? Not necessarily, because the increase in wealth in the hands of users will boost consumption. It is obvious in Hong Kong, a financial center, business prospers when the stock market rises; when the stock market falls, business is miserable.

Buying bitcoin with USD brings a leverage effect similar to the stock market, and the rise in Bitcoin offsets USD contraction. It is the process of gradual absorption of credit coins. Reform is about revising historical mistakes, and gradual is better than radical. Therefore, it is a gradual reform. The change is to the central bank, which has no impact on the operation of commercial banks' M2 assets and is the least painful method of reform for the entire financial market.

This way, users can "lend" money directly and without interest, reducing the source of profit for commercial banks, and users keep the assets themselves, intending to reduce bank profits. Individuals can invest more efficiently, without interest pressure, and favor long-term investments. If all UDAI is lost, but bitcoin is still rising, there will always be money to spend as long as it is not confiscated. The heart of the matter here is the need for Bitcoin to maintain its rise. It is something that the gold standard does not take into account.

12.3.3 Balanced demand model

When market demand for UDAI is high, the Fed withdraws USD from the market, buys Bitcoin, and issues UDAI. The details here have to match what the Fed move.

12.4 The Role of the Bitcoin Stabilization Fund

It is the contribution of all Bitcoiners to the world, following Satoshi Nakamoto and participating in the change of history. Contribute 5% of your Bitcoins to the Bitcoin Stability Fund. This method involves benefits and applies the Bitcoin community's democratic voting process, with users, computing power, and programmers voting. As we described earlier, the three parts of the voting power are 49% for users, 25% for computing power, and 26% for programmers. A simple majority applies. This method is a multi-win, and we believe the Bitcoin community will pass it. The procedure is straightforward to change; adjust it once for all accounts. Can also be This method at the same time as the decimal point is moved. Less than 1000 will not contribute to adjusted Bitcoins, and this number corresponds to the number of unadjusted Bitcoins, which is 0.01. This way, the total number of donated coins will be less than 5%. But close.

The idea of this design is:

Satoshi Nakamoto admires nature and freedom and wants to reduce human intervention and let the system adjust spontaneously. He used the negative feedback principle of automatic control in Bitcoin for block-out time regulation so that the block-out does not deviate too far from 10 minutes. Guaranteed the stability of the Bitcoin system for Bitcoin to succeed. But he has no control method for the price of the coin, and there are big ups and downs in the process of the Bitcoin price increase. It has obvious implications for the DAI. Bitcoin funds are used for stability against volatility, and the stabilization mechanism I designed in the literature (2) applies to Bitcoin stability. Turning Uncertain Speculation into Trending Investment.

Speculation must exist, but the magnitude will get smaller and smaller. It is done by starting with the Bollinger Bands as the stabilization area, beginning to buy when the decline is below 10% of the lower Bollinger Bands, and terminating with a buy at the lower Bollinger Bands. When it gets above 10% of the upper Bollinger Bands, start selling the bought Bitcoins gradually, and terminate by selling at the upper Bollinger Bands. Buy first, then sell. It gradually decreases in magnitude, and the volatility is similar to gold at the end of 9 cycles. 50% of the profits go to the contributors, and 50% covers the dollar debt. Taxes are no longer calculated and are directly offset against the U.S.

government's dollar liabilities. Once there is a defined range of volatility, and the trend becomes predictable, the market is brilliant, and probably bitcoin will not fall to the point we envisioned. At that point, the Bitcoin Stabilization Foundation can decide, through a community vote, where to raise the purchase point. When foreign contributors contribute more than $500,000, the Foundation can assist with immigration status to the United States.

12.5 The Federal Reserve's Role in Bitcoin Stabilization

Bitcoin is at computing power cost that constitutes the bitcoin price moat, called the computing power moat. Suppose the Bitcoin Stabilization Fund fails to stabilize the currency's price. In that case, the Fed uses USD to start collecting Bitcoin at 10% above the moat price of the computing power, assuming the computing power moat at $10, and then unlimited collects Bitcoin at $11. It ends when the price to $12. Bitcoin starts selling at the middle of the Bollinger Bands and terminates at the bottom. It acts as a good absorption for USD. Also, use the profits to offset the USD government debt. The price drops to the bottom of the computing power moat, and Bitcoin is undervalued, consistent with the ultimate lender bailout action.

The idea of this design is:

Satoshi Nakamoto takes the uncertainty of the free addition of computing power and turns it into a deterministic linear coin offering. The present method is to turn uncertain growth into trend-definite growth, reducing the large swings of speculation. Bitcoin is a one-way driver of demand expectations, the cost of computing power is determined by demand expectation, and the expected future price growth drives the growth of computing power. The expectation about the future price of Bitcoin actually determines the price direction of Bitcoin, which is the role of the flag. The theoretical basis for price expectations is given in the next section, including the Bitcoin natural growth curve and a graph and table. The growth in computing power raises the price moat, called the upward spiral. Gold does not have this property. Stabilizing the trend is also a method not considered by Maker Dao. They also don't have the strength of the Fed. This method is also an innovation to stabilize the Bitcoin dollar UDAI.

In Maker Dao, people use DAI to buy Bitcoin, mortgage DAI, buy Bitcoin, and mortgage with leverage. The volatility of Bitcoin at this time is unpredictable, and doing so is risky. However, suppose there is a stabilization mechanism. In that case, the certainty will be significantly improved, and there will be arbitrage opportunities with shallow risk, just like China's real estate, which has a long rising cycle. The logic of rising house prices is that there is undervaluation. If the Bitcoin standard is determined, then Bitcoin is also undervalued. But real estate has a ceiling, and Bitcoin has no. It is low risk and high profit. This profit becomes the driving force of economic development. Just look at China's real estate to promote the development of the entire Chinese industry. It is China's economic development secret, and today's dividends have been eaten up. In the dividend period, people who dare to use leverage to buy a house in China enjoy low-risk arbitrage and become rich quickly. The same arbitrage opportunity lies in the linked exchange rate of the U.S. dollar and the Hong Kong dollar. It is stipulated that the fluctuation of the Hong Kong dollar is 7.75-7.85%, with a flux of 1%. Similar to the adjustment method in this article, the difference is that Bitcoin has a trending growth and a large fluctuation range, which is better than the arbitrage opportunity of the Hong Kong dollar.

If the Bitcoin standard and price stability mechanism are realized, this arbitrage opportunity is better than real estate in China and over the Hong Kong dollar-linked exchange rate. It is the welfare of our generation. In the future, whoever has bitcoin will be rich.

12.6 Bitcoin's Method of Offsetting U.S. Debt and Satoshi Nakamoto's Status

The Bitcoins contributed by Satoshi Nakamoto started to pay off the interest on the U.S. debt with a 10% increase in value in the tenth cycle. It is estimated that by the beginning of the 20th cycle, the 10% increase could cover most of the interest; in the 30th cycle could cover the entire principal amount of the U.S. debt, which means that around the 25th cycle, half of the stabilization fund plus the Bitcoins contributed by Satoshi Nakamoto could cover all of the U.S. debt, thus giving complete ownership of the Bitcoins to The Federal Reserve. As a result, the U.S. is obligation free. It is just for reference; the specific repayment of the debt is the Fed's management responsibility.

Given Satoshi Nakamoto's contributions, the Fed has a permanent seat for Satoshi Nakamoto and can designate a successor.

See the next section for the relevant data measurements.

12.7 Why it is Bitcoin that qualifies for the Bitcoin-dollar standard

Let us make a competitive comparison.

1. comparison with Bitcoin Imitation projects:

Coins with similar principles to Bitcoin are called Bitcoin Imitation projects: BCH, LTC, and Doge, etc.; compared to them, Bitcoin has the maximum effect of the Internet, and the three together have less than 3% of Bitcoin's market capitalization. In other words, the consensus depth of the imitation project is not enough. The computing power is also too small. Second, no one like Satoshi Nakamoto held so many coins in his hands in these Bitcoin imitation projects.

2. comparison with Ethereum:

Ethereum adopts the POS consensus mechanism, which does not consume energy and loses the scarcity value of asset conversion. Its value is no longer converted by external value but depends on the value of the project itself. In this way, the analysis method of its value is suitable for the analysis method of project equity in the traditional financial market. The simplest analysis is that its project value is derived from transaction fee income, and most of the value of the fee income is captured by the collateralized ETH. There is a benchmarking relationship between the value generated by the mortgage of ETH and the bank's fixed deposit, which restricts the rise of ETH, which has a price ceiling and has lost the opportunity to compete with Bitcoin as the currency ruler. There are many unreasonable points in Ethereum changing the consensus mechanism, and it is a long article to write. The most straightforward summary is a sentence: picking up sesame seeds and throwing away watermelons, Ethereum has become a payment tool. Its value is not as clear as equity coins.

3. compared with various equity coins:

Some have hard currency characteristics, such as Google and Apple's equity. They can also issue coins, but they have the risk of unpredictable company life. Again, it is because time life determines their value only for a limited time.

4. contrast that with gold:

The most significant disadvantage of gold is the uncertainty of the amount mined and the total amount mined; when the price rises, the amount mined increases. Also, liquidation does not have the convenience.

5. comparison with CBDC:

How does CBDC generate global consensus? What is the asset behind the endorsement? For example, air endorsement is aircoin, asset endorsement, depending on what asset it is; if it is gold, it has been analyzed above.

The above is the rationale for Bitcoin as a reserve currency endorsing the dollar standard. It is also the rationale for the bitcoin standard.

12.8 The Fed's New Positioning and Future Changes

With the outbreak of the economic crisis, the Fed served as a fire-fighting team, and it is positioned ambiguously, and increasingly ambiguously, with a semi-official nature. In addition to its banking functions, the Fed has the task of fighting inflation and ensuring employment to achieve financial stability and economic growth. Is this a goal that the Fed can accomplish? Calculating with toes is not possible.

The current work of the Federal Reserve is treasury management, exchange rate management, interest rate adjustment, issuance of currency, and the ultimate lender.

Can quantitative easing accomplish the goal of economic growth? Quantitative easing is only adapted to crisis management, a quick fix. One stimulus still makes sense, from the stimulus behavior to produce benefits to have a time delay; only the capital market is an immediate reflection. How can we accurately judge the stimulus effect?

Can interest rate adjustment guarantee lower inflation? The talk of a rate cut cycle and a rate hike cycle shows that the Fed's judgment is inaccurate and needs to be tried repeatedly. There is no process simulation for this process, and If the Fed is capable, it should draw a forecast curve advance. Unfortunately, we don't see this prediction curve. Therefore, the interest rate adjustment cannot match the time when the real economy produces benefits, causing the final result to be overshoot.

The money sent by the Fed is divided into three parts: one goes to the real economy, one to the capital market, and one to the international market. Inflation and employment are both indicators of the real economy. But, as the financial industry has grown into an Industries independent of the Real Industry, how does its employment reflect? Are freelancers who speculate in financial stocks practitioners or unemployed? How many of the unemployed are freelancers? Do our inflation indicators include financial indicators? From the stock market's point of view, the indicator closest to inflation is the average price-earnings ratio, which is overvalued and undervalued and very sensitive to interest rate hikes.

There are many reasons for industrial price changes caused by demand. The recent energy rise is the Russian-Ukrainian war and Biden's wrong energy policy; raising interest rates cannot solve this question. The advantage of the Fed's rate hike policy is to shrink the global dollar and may accelerate Russia's downfall. If the Fed has a political purpose, it deviates from the original goal. This rate hike cycle will hurt the U.S. domestic economy in the short and long term, and there is no way out.

The classic theory for adjusting interest is to reduce investment. The industry is a long-term investment; the hope is stability. Unfortunately, speculation caused by interest rate adjustment, mainly financial speculation, has a tremendous negative effect that destabilizes expectations for the future. I'm not a financial expert, and I know from common sense that the world economy is getting worse and more unstable. It shows that traditional financial theories and formulas are suspect. Otherwise, there would be no Satoshi Nakamoto.

So both functions should be incorporated into the final lender's lending strategy for crisis management.

In the bitcoin standard, the Fed is the world central bank, replacing the IMF and the World Bank, and so is the world lender of last resort, responsible for bailouts of the global economy. However, the lender of last resort is only responsible for international and domestic crisis management. Exchange rate management is not his responsibility, and National debt management is his domestic responsibility. Converting credit dollars into Bitcoin dollars is his new responsibility. It clarifies the Fed's job, not responsible for long-term economic development but only for crisis management.

Without the credit dollar, the various monetary and financial theories that followed had to be improved; in contrast, the Austrian school achieved the ultimate theoretical victory, and we pay tribute to the great masters such as Mises and Hayek. Under the new transaction settlement platform (2), central banks, commercial banks, and individuals behave as nodes with full equality of status. New theoretical masters are needed to study the economic phenomena under the conditions of the Bitcoin standard. There is a need for theory and practice to work together to drive the economy in a big way and get out of the current economic growth rut. The new platform (2) automation and intelligence significantly reduce the responsibility of market management and will further reduce the government's function. For individuals, collateralized Bitcoin loans become convenient and have no interest, the money spent with no interest pressure. Central banks directly to individuals. Individuals keep their assets. Commercial banks begin the journey of being disintermediated. The increased computing power leads to using clean and wasted energy, driving new economic growth.

12.9 The New Bretton Woods Consensus - The Hong Kong New York Consensus

1. The Hong Kong New York Consensus is that Bitcoin backs the USD to form the Bitcoin UDAI, which is dual-track with the USD. the UDAI will have a sponging effect on the USD and eventually merge with the UDAI.

2. The Fed has naturally become the world's central bank because of the American ability to innovate.

It is a beautiful country that has produced a series of great product gurus; in recent times, there are Steven Jobs, Elon Musk, and Satoshi Nakamoto. They are irreplaceable figures. Without they would slow down history. The United States is a great nation, with Americans holding more than half of all Bitcoin and 10% in official hands in the future, more than double the 5% of total gold holdings (this figure is estimated based on a total of 175,000 tons of gold, with the U.S. holding 8,000 tons). The Fed can expand its holdings of bitcoin in the future. With an advantage that no other country has. Guarantees the dollar transition from a credit-based to an asset-based currency backing. This endorsement strengthens the strong position of the dollar. The Federal Reserve assumes responsibility as the international lender of last resort.

3. Bitcoin completes the global consensus and competes for reserve currency


The early competition was contingent, just as gold was easy to find early on. The issuance mechanism of Bitcoin is fair from the beginning, and even Satoshi Nakamoto's coins were mined. Fairness is easy to build consensus. The process of forming consensus must go through local, general, and global. The addition of the Federal Reserve means the formation of a global consensus. Bitcoin, scarcer than gold, has finally become a reserve currency, and UDAI has become a value ruler.

4. In transforming the credit USD to the Bitcoin dollar UDAI, Bitcoin generates attraction; its generation is achieved through the Federal Reserve Stabilization Fund and the Federal Reserve's stabilization mechanism.

5. The Fed no longer issues money arbitrarily.

To rearrange the relationship between the government and the Federal Reserve. Can sell Bonds secured by the U.S. government with tax increments to individuals who hold

bitcoin. In other words, the old debts are repaid with the current tax, and the newly issued bonds must have a complete tax guarantee. That is to freeze the old debt principal, which is solved by the rise of Bitcoin.

6. Relevant communities are involved in the Fed's decision-making process.

12.10 Differences from the Bretton Woods system

The Bretton Woods system realized the gold standard, and the dollar is pegged to gold; the Hong Kong-New York consensus realized the bitcoin standard, and the dollar is pegged to bitcoin; the two issues and forms are the same. So that is the reason for c

alling the bitcoin standard the new Bretton Woods consensus, and the meaning of the system is not the same as follows:

1. That is not an agreement, just a consensus, the free to come and go. The Fed's strong position is a product of the market.

2. Unlike gold, Bitcoin is separate as a reserve currency and a unit of the denomination. U.S. dollar is still the unit of measurement, only from a credit currency with an air component into an asset currency backed by scarce resources. In blockchain practice, Luna (UST), which does not have 100% USD backing, instantly goes up in smoke. And USDC and USDT, which have a 100% USD margin, hold up despite fluctuations. We don't need to go back to the gold standard, and we can't. A dollar standard backed by Bitcoin, the Bitcoin standard, is required. Blockchain is a free ecology, completely unregulated. Stablecoins naturally grow out of it. Blockchain has allowed us to see the natural ecology of each in its way, as well as the riches and rapid disappearance of speculation. Blockchain quickly condensed thousands of years of human history mapping, an ideal social and financial ecology laboratory. The lack of blockchain cognition needs to be remedied; otherwise, the Bitcoin standard is beyond their imagination. The earliest discovery of gold may be effortless; today, a gram is difficult. Early discovery is value; early convincing yourself is value.

3. The financial system has not changed, and commercial banks have not changed, but the business is affected by the need for significant changes. The main difference is the central bank. After 100 years of efforts of two to three generations, completed the establishment of the "Currency Standard Scale," i.e., the Value ruler.

The Hong Kong-New York consensus will come to fruition because all parties gain. Satoshi Nakamoto gains, Bitcoin holders gains, newcomers gain, the Federal Reserve gains, and the U.S. government gains.

The world benefits from the bitcoin standard. The world is no longer at the mercy of U.S. domestic monetary policy. However, the constantly changing scale of the ruler will confuse people's thinking, which is the source of chaos. The state, institutions, and the public are equal in the face of the bitcoin standard. Our descendants will thank their forefathers and create a fair environment to purify minds and morals.

12.11 The Bitcoin Standard turns out to be so simple

Economic development and inflation are the fundamental contradictions to which fiat currency has no solution. The idea of this section is inspired by Satoshi Nakamoto's Cryptoeconomics, using the techniques and results of Cryptoeconomics to solve the fundamental problem of economics. This problem is like the Byzantine General's problem, which is almost mathematically unsolvable, but Satoshi Nakamoto solved it very easily by economic means. The reason why Cryptoeconomics is excellent lies in the transposition of thinking. This paper is just a few thousand words, avoiding the profound finance and lengthy monetary theories, grasping the most basic concepts and definitions of finance and monetary science, and designing solutions from the problem, not limiting what economic and financial theories of dogma, and therefore is ugly.

The Keynes and Friedman arguments are both valid and flawed, they are arguments in the same dimension, and there is no solution. They did not think of using technical means to solve economic problems. The use of technical means is not only the use of mathematical formulas to form economic theories but also includes implementation methods. Our proposed method is like Satoshi Nakamoto's solution to the Byzantine General problem, which is simple and effective, but without theoretical height and is only an example of the application of Cryptoeconomics. Practice and theory are used together, and more emphasis is placed on implementation solutions. It is the proposition and characteristic of Cryptoeconomics.

Anyone with a college education can understand the idea of this article, and the concept of this article is the deposit appreciation method. The fact that deposits do not retain value is a travesty caused by fiat money. People deposit money in the trade-off between current and future consumption; when saving money to preserve its value, there is no possibility of over-consumption, and there is no waste of social wealth. The economy follows the laws of natural growth, money is formed by historical values, and without air money, there is no inflation. Inflation is a phenomenon unique to fiat currency.

The solutions used in this paper are proven techniques in Cryptoeconomics and have been experimented with in the Maker Dao.

This section presents one way to achieve the Bitcoin dollar standard for the first time. It solves two problems simultaneously: reducing the historical debt accumulated by the dollar and realizing the Bitcoin standard, and clarifying the Fed's primary responsibility as the "global lender of last resort." Everything else should be automatically regulated by the market, including keeping bitcoin stable is automatic and is not the Fed's primary responsibility.

To understand this article, you need to know how Maker Dao works. See the next section to understand the pros and cons of fiat and the gold standard. The mortgage issuance of the central bank is no different from the mortgage issuance of commercial banks; the difference lies in the different collaterals.

In the next section, we will decipher the passcode in Satoshi Nakamoto's 132 years, and the price of Bitcoin as a reserve currency will follow the economic growth. We plot a 132-year Bitcoin price growth curve corresponding to economic growth. What to do after 132 years? Satoshi Nakamoto of that era solved it. The solution will be the same, using methods consistent with natural growth.



1. The Maker Protocol: MakerDAO's Multi-Collateral Dai (MCD) System

2. Web3.0 Chainless Financial Platform White Paper

Hong Kong Yuxing Technology Company (8005)

3. 《貨幣王者》P.11





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