Negative-Growth Economies in Stablecoins

Saying the Truth Out-Loud

Photo by Raúl Nájera on Unsplash

Definition

‘Negative-Growth Stablecoin Economy’:
The number of Users in that Stablecoin’s Ecosystem is decreasing over time.

I read the Whitepaper of Carbon recently, and on Page 10 it says something that I do not believe to be the Truth:

How viable are zero-growth economies in the context of stablecoins?

General economic opinion suggests that zero-growth economies are impossible as any amount of work to make a closed-energy system more efficient creates value and thus positive growth. Basecoin provides excellent analysis as to why. As far as stablecoins are concerned, it’s possible to see zero-growth rate if competitor stablecoins gains larger market momentum and adoption. That’s why it’s imperative that the ideal stablecoin has the best risk/reward incentives as well as base infrastructure to support a truly scalable and minimal fee stablecoin. Since Carbon has 100% of the expansionary upside reserved for users who help contract the system, we believe this is inherently an extremely attractive option for early adopters and speculators to bootstrap Carbon

Here is what I do not believe is the Truth:

“General economic opinion suggests that zero-growth economies are impossible as any amount of work to make a closed-energy system more efficient creates value and thus positive growth.”
(Basis has Brainwashed themselves with the very same assumption as well.)

The assumption that Stablecoin ‘economies’ will adhere to the ‘zero-growth impossibility’ of any real-world economic system is Wrong.

That assumption is Wrong because Real-World economic systems have massive friction to ‘exit’ and Stablecoins do not.

Let’s compare the friction of trying to exit one Economy for another versus trying to exit one Stablecoin for another.

Exit USA Economy for Chinese economy:

1. Learn Chinese Language.
2. Learn Chinese Culture.
3. Find land/house to buy in China.
4. Have enough $ to buy land/house in China.
5. Be able to read the Chinese laws/regulations to determine how a foreigner can buy land/house in China.
6. Be able to speak/listen to Chinese fluently to be able to ask Qs about the laws/regulations and understand the answers you get back.
7. Be able to trust that the person you’re speaking with is being sincere in their answers.
8. Deal with stress of kids switching schools to a foreign nation and losing friends.
9. Deal with stress of wife switching jobs, losing her friends, and moving away from her family.
10. Deal with stress of helping wife to find job when she does not know the Chinese language.
11. Deal with stress of your own family, and your family-in-law, telling you how dumb you are for making this choice.
12. Renounce US Citizenship
13. Pay taxes upon ‘exiting’ US for final time.
14. Convert Currency (and take a haircut on the Exchange Rate)
15. Deal with prejudice of being a Westerner in China.
16. Try to find new friends.
17. Try to create a new support system.
18. Try to understand all the new laws and the healthcare system.
19. Build an entirely new life.
20. Done.

That assumption is Wrong because real-world economic systems have massive friction to ‘exit’ and Stablecoins do not.

Exit a Stablecoin for another Stablecoin/‘more-trustworthy’ Digital Fiat:

1. One-Click on the Decentralized Exchange Button
2. Done

Because ‘exiting’ one economic system for another is so hard, we can believe the ‘zero-growth impossibility’ of any real-world economic system to hold true- the USA economy will continue to grow because people who are proficient at making it grow have a lot of friction to ‘exit’ and go try to grow some other nation-state’s economy.

Same in China- the Chinese economy will continue to grow because people who are proficient at making it grow have a lot of friction to ‘exit’ and go try to grow some other nation-state’s economy.

Upon the advent of Bank-Issued Digital Fiat, zero-growth rates and negative-growth rates will become the norm for 3P Stablecoin Projects. There is just no way they can compete with the ‘Trust’ of being able to walk into a Bank Branch, give the teller Physical Fiat, receive a Bank Stablecoin (Digital Fiat), and then turn right around and redeem that Digital Fiat for Physical Fiat at any other Bank Branch. No 3P Stablecoin Project will have that ‘trust’ nor will they have the required Retail Footprint.

As a Result, most people will move from 3P Stablecoins to Digital Fiat via this process:

1. One-Click on the Decentralized Exchange Button
2. Done

And they will never look back.

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