Granular Economic Sovereignty (GES)
The creation and distribution of digital currency, otherwise known as cryptocurrency has created an environment that enables a new type of economic condition: “Granular Economic Sovereignty” (GES). GES occurs when an economic system separates value from the effects of external factors that may not directly correlate to the value represented by the system. Digital currency is the enabling tool of economic independence.
Granularity is achieved through the connection of a distinct base group or asset pool to its own digital currency. Sovereignty comes through the issuance and redemption of the dedicated digital currency. The digital currency value is maintained through asset redemption and supply management. The ability to efficiently separate and manage the economics of a specific asset pool is a new level of economic granularity previously unachievable. With digital currency it is possible to create digital assets with value in open markets that are more narrowly or precisely measured.
GES is directly impacted by the economic interactions of a group or groups. The transactions between groups and their supporting digital currencies are the foundation for the reorganization of monetary models. It is the applications of GES to various markets, groups and consortiums that have the ability to transform how the global economy is structured.
Economic sovereignty is an effect created by the inherent nature of digital currency when applied to a particular group or pool of assets. Sovereignty is enhanced by technological features if those features benefit the objectives of the digital currency support base.
Additional functionality that does not directly benefit the transactions of the group can introduce security problems and usability issues that can negatively impact adoption. Superfluous functionality is detrimental.
Factors that create incentive for external transactions reduce the GES of a digital currency, e.g. redemption to a different digital currency. Reduction of GES can have undesirable market effects or reduce user support.
GES does not mean isolation. GES is enhanced through complimentary assets and cooperative exchange. Complimentary redemption increases market activity and transaction velocity. GES enhancement strengthens the viability of a digital currency. Further redemption options enhance the viability of the digital currency.
GES benefits from expansion of those who support the digital currency through redemption. Redemption options that are complimentary strengthen the GES of a digital currency. Cooperative exchange creates further support for conditions that maintain the value of the digital currency based on the assets. If additional redemption options are added to the economy, additional valuation factors arise but will hinder or discourage unrelated participation.
An increase in use by complimentary redemption offers will increase market activity and interest where unrelated assets will be discouraged through lack of interest and accompanying market valuations. Unrelated assets will be incentivized to migrate to more favourable exchange markets where better associative value can be achieved. Overall market conditions become more dynamic and better suited for valuation.
Digital currency is the tool of economic independence that facilitates granular economic sovereignty. Granular economic sovereignty changes the essence of economics.
This is the second part of a series of articles that will later be released as a longer form document and cross-posted on a few different social sites.