Hydra and the P2P Economy: Fixing Our Broken Monetary System
We live in a debt-based monetary system. There’s always more debt than equity. And it’s not like we can just wipe the slate clean and start again: these debts can never be settled, because they’re extrapolated from the future and brought into the present. In fact, people, companies and governments are often penalized for trying to settle debts, which is absurd.
All new money that comes into existence does so as debt. People talk vaguely of “printing money” and the problems associated with it, but that has not been a helpful shorthand for many decades. The fact is, new dollars are made by being loaned into existence. The Federal Reserve loans them out to its member banks, then those member banks loan them out to their customers. Thus, banks are the gatekeepers of all money. Through their lending, they decide how much is created. Even the government has little influence on this. Banks also loan money to the state, and in doing so hold future generations hostage.
This pyramid of wealth and power — dominated by the few at the top — has failed and is beyond reform. This failure is not rooted in superficial issues such as politics or governmental regulations; the failure is an inherent structural feature of the connections between the state, politics and business. These inherent flaws are so severe that it’s really a miracle the system has taken so long to fail. But it is failing, and fast.
Cryptocurrencies as equity-based systems provide the first fundamental steps towards the money of the future; where new coins are minted into existence as equity, not debt. New cryptocoins aren’t owed to any central authority as soon as they are created. In fact, they are created without the need for a central mint at all. They are apolitical and not governmental owned, not based on debt and non-discriminatory. They are in the hands of the people. Freedom of money and freedom of banking, with no government or semi-private banking cartels involved.
At least in theory. But the first-generation of cryptocurrencies has not lived up to its promise.
How Current Cryptocurrencies Are Limited
Today’s major cryptocurrencies such as Bitcoin and Ethereum have some inherent flaws. These industry-wide limitations can be fixed, but this first requires us to accurately identify the problems.
For Bitcoin and Ethereum, two of the most well-known cryptocurrencies, these problems include:
1] Excessive transaction fees
2] Excessive resource requirements
3] Slow transaction times
4] Protocol centralization due to the influence of mining pools
5] Excessive energy requirements for security
6] Inability to provide on-chain microtransactions
7] Centralized decision power over block creation
8] Inadequate incentives for individual nodes
9] Less trustless than originally conceived
10] Poorly thought out smart contract design (Turing completeness is mathematically interesting but provides limited practical benefits in exchange for enormous security and operating issues)
The Solution: Hydra
With Hydra, we at Libertaria are working to fix these problems by building a better system: a connected system of distributed ledgers with a next-generation consensus mechanism and no wasted energy. The idea of cryptocurrency as digital gold used to store and transfer value will be kept and optimized to provide better monetary policy. At the same time, the wider network will support any and all other types of cryptotokens which communities might desire. By keeping them linked but distinct, we avoid the problems of the one-size-fits-all approach taken by the current leaders in the crypto market. Cryptocurrencies allow us to create a free market of monetary systems, allowing individuals to freely choose which best suits their needs.
With Hydra and Libertaria’s other P2P economy technologies, communities will have the ability to design a sustainable system that is neutral, trustless, permissionless and is not skewed toward arbitrary hierarchies — a system that works from the bottom up and transfers production of equity and wealth back to the hands of the people. Value will be created without any connection to a fiat-backed system.
The money of the future should be transparent and mathematically regulated based on contracts or community charters. Changes to monetary policy will be made by all participants via a governance system and not by the few at the top who luxuriate in ivory towers making thoughtless decisions which have repercussions for generations.
We have just released our Hydra vision paper, which provides a more in-depth explanation of the philosophy behind Hydra, the problems we hope to solve, and a vision of how Hydra will ultimately work. You can download it from our website at https://libertaria.world
Our teams are currently working on the technical details and we expect a white paper to follow in the next two months as we create prototypes.