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What is the decentralized economy and what it is for
Written by Davies on / Reading time: 3 minutes.
Have you heard about the decentralized economy? Do you know what it is?
In this post, we want to share with you what it is and what are we all living today. The Internet of value has much to do with this, as the cryptocurrencies have managed to leave economic stability to the free market, at the mercy of supply and demand without adulteration. Talking about a decentralized economy system implies a moment of unleashing the traditional assumption we have had from central banks and their credit regulation.
So, we’re going to dive into this world. Are you ready to join us?
The role of government organizations
As utopian as it may seem, governments do not play an important role in this economic course, mainly because it is clear of any subjection. In this way, we can define the decentralized economy as a system in which the large part of the goods and services are in the hands of private companies, there is little government intervention in the market. In this type of economy may arise higher quality and better prices because it is the offer what determines the demand for goods and services.
It is very important to conceptualize the role of Governments as representatives of citizen opinion and as lax regulators of the economy, by asserting justice and equal opportunities with their coercive power but maintaining a distance with certain sectors that of autoregulate with the mere passage of time and will release centralized power to the institutional policy.
The knowledge of the people who are in charge of the private corporations that seek to manage parcels of the power of this type of systems is exploited to the maximum, and although there are many central banks that criticize its operation, it is undoubtedly that each time they are doing a major tour.
Example of a decentralized economy
As you know, these are virtual currencies that can be exchanged and operated by any other traditional currency, but they are outside the ownership domain of governments and financial institutions “public”, as many of the great Institutions that handle exchange values are private funds reserves, such as the US Federal Reserve.
Currently, we have thousands of these cryptocurrencies available, all with their respective features and applications.
We talk about them as part of the decentralized economy because they are assets that allow society to have control over their money without compulsory third parties. Making loans between individuals or making any transactions is no longer a task that has to go through the bank. These virtual currencies allow you to make instant payments, anytime, anywhere, at a low cost. Isn't that wonderful?
So many are the promising actions of this initiative, in which the central banks have found in them a real threat. However, they seem to be entering the traditional dilemma of joining or disappearing. The value of these cryptocurrencies, like Bitcoin, is not exclusively linked to the behavior of a particular economy. Therefore, its value depends on the commitment of the users on a global scale in the maintenance of its price, something that can cause uncertainty to many.
What is it for?
The decentralized economy emerges as part of a critique of existing market-economy systems. Virtual currencies are making financial decentralization possible, which undoubtedly influences the economy. Some of its professionals say that this type of economy is used to reduce costs and increase efficiency, so that there are fewer surpluses and shortages of products so that people can be free to choose what to produce and consume, take advantage of the time and knowledge, etc.
Of course, it is not the same to speak of a decentralized economy than of cryptocurrencies, but we do dare to place them at a close level for their contribution to it. Spain, Switzerland or the United States are examples of such systems, and it must be said that virtual currencies have already reached them. As a result, we are witnessing the reaction of central banks, who still show a strong reluctance to their use and proliferation.
Where is our economy heading? What role will virtual currencies play in the course of 2019?