Redefining Money: Solis Flatcoin and the Promise of a Stable Financial Future
For over two millennia, the exclusive authority to create money has rested in the hands of governments, enveloped in an aura of secrecy and reverence. This right to mint coins has been meticulously classified, formalized, and recognized as an indispensable right of those in power. However, the realm of economics reveals that monopolistic entities, like central banks, are susceptible to perverse political incentives and prone to blunders. In 2022 the United States experienced an inflation rate of 8%, while countries like Argentina and Venezuela witnessed staggering rates of 94.8% and 1,588% respectively .
In light of the advent of decentralized ledgers, these nations naturally sought out alternative solutions for their currencies, ultimately gravitating towards Bitcoin. However, this choice proves to be underwhelming, as Bitcoin falls short of being a comprehensive replacement for an entire financial system. Bitcoin, a cryptocurrency notorious for its price volatility akin to the most erratic stocks on the NYSE, was embraced by these countries due to its superior value retention compared to their native currencies. Whether you reside in a developed nation and seek to safeguard your assets against the erosive effects of inflation, or find yourself in a hyperinflating economy grappling with a lack of price stability and limited banking services, you deserve access to a robust currency. You require a currency that maintains a stable value, detached from the control of a single centralized entity, providing unrestricted and equitable access to individuals regardless of their location or status, shielding them from the pitfalls of politically motivated incentives.
In the tangible economy, the criteria for assessing a sound monetary system revolve around three fundamental elements: medium of exchange (can the currency be reliably used in transactions?), store of value (can one maintain a stable purchasing power by holding the currency?), and unit of account (can the currency serve as a reliable measure of value?). While Bitcoin and other cryptocurrencies such as Ethereum certainly excel as stores of value, their annual volatility of over 70% renders them unsuitable as ideal mediums of exchange. On the other hand, sovereign currencies offer convenient units of account, but the imprudent monetary policies and stringent foreign exchange regulations implemented by central banks have led to a palpable failure in their proclaimed mission of preserving our purchasing power. As the late Nobel laureate F. A. Hayek astutely observed, history is predominantly a chronicle of inflation, typically engineered by governments for their own benefit.
Undoubtedly, Bitcoin’s adoption of a deflationary monetary policy represents a revolutionary endeavor. It aligns with the theoretical propositions put forth by economists of the Austrian School who advocate for “private money” and the dismantling of state-controlled currency. However, the simplicity of Bitcoin’s monetary policy design, while elegant in theory, impedes widespread acceptance. With diminishing block rewards and a cap of 21 million bitcoins, its price volatility proves detrimental to everyday transactions. Rather than serving as a true digital currency, it is more fitting to label it as digital gold, as it falls short of fulfilling its core monetary functions.
Introducing Solis — An Inflation Proof Stablecoin:
Solis emerges as a superior form of money compared to traditional fiat currencies and other cryptocurrencies. Although Solis does not fall into the stablecoin category per se, it can be better described as a flatcoin due to its unique feature of maintaining a stable value relative to inflation. This is accomplished by aligning Solis’s price with the worth of a basket of goods and regularly adjusting it to counter the effects of inflation. While the purchasing power of the US dollar steadily declines over time due to inflation, Solis’s value actually increases by an equivalent amount, positioning it as an exceptionally reliable store of wealth.
In contrast to relying on the Consumer Price Index (CPI), which employs outdated methodologies and updates on a monthly basis, Solis utilizes a transparent and independent inflation index called Truflation to accurately gauge the true inflation rate. Truflation is a blockchain platform, ensuring cryptographic verification, and updates daily by aggregating data from over 10 million data points and more than 30 reputable sources. The disparity in accuracy between these approaches is striking — the US government-reported inflation rate for the first half of 2022 ranged from 7.5% to 9.1%, while Truflation’s genuine and unbiased calculations revealed actual US inflation rates between 9% and 12%.
The implications of the US inflation rate extend to the cryptocurrency industry, where almost all of stablecoins are pegged to the US dollar. Stablecoins have become the backbone of decentralized finance; however, they mirror the depreciation of the US dollar, posing a precarious situation for an industry in search of superior alternative currencies. This predicament finds its resolution in Solis flatcoins, which circumvent reliance on fiat currencies and thereby evade depreciation caused by inflation. Furthermore, centralized stablecoins in the US and numerous other countries are anticipated to face increased regulatory scrutiny, making Solis an even more compelling solution.
Solis follows an overcollateralization model, wherein the amount of cryptocurrency held as collateral surpasses the quantity of Solis in circulation. This approach serves as a safeguard, ensuring that Solis maintains its full value, even during challenging or unpredictable market conditions.