On January 1, 1999, Europe launched the Euro, the common currency of Europe. Ten years later on January 3, 2009, Satoshi Nakamoto launched Bitcoin Mainnet, starting with the Genesis Block of Bitcoin. Both occasions were aimed to solve the problems of the existing financial system, but their method took a two-tier approach: centralization and decentralization.
The Euro was a well-represented case of the problem of currency monopoly. When countries are in a recession period, weakened national competitiveness would depreciate their currency’s value, thus reducing imports, and increasing exports with relatively price-competitiveness. This scheme gradually increases the value of money as the countries recover from the recession.
However, countries have lost their control of monetary policy after joining the monetary union that adopted the Euro. Those countries cannot do anything despite the accumulation of national debt which eventually will lead to state bankruptcy.
Bitcoin has developed a mining based currency issuance mechanism to prevent the centralization of the profit of seigniorage that the banking system has been monopolizing. But it also became concentrated with a small number of miners with large capital.
In Bitcoin, the node that performs the management of distributed ledger and the miner that issue the new coin is the same entity. This is causing the concentration of both the profit of currency issuance and the profit of Bitcoin network operation to miners. In addition, there is also a phenomenon of centralization of a few miners who have a stronger computing power due to the adjustment of mining difficulty.
The decentralization of the monetary system was claimed by Nobel economics laureate Friedrich Hayek in his 1976 book, “Denationalization of Money”. The argument is that if each economic entity issues its own community currency, a good money is chosen by the principles of the market mechanism, and a more ideal monetary system can be built.
As Eurozone problems have shown, the ability to adjust the value of money by region or by the economic entity is one of the new functions of money that has been overlooked. If anyone can issue money and adjust their price competitiveness through currency exchange adjustments, then we can properly adjust regional economic differences and competitive advantages between companies to create a society in which wealth is distributed more evenly.
In order to Friedrich Hayek’s theory to work, anyone should be able to issue money easily. After Bitcoin, it seems that anyone could issue money easily through the blockchain technology, but the reality is not that simple. Designing and distributing new cryptocurrency mainnets, such as Bitcoin, requires millions of dollars and long-term technological development.
It’s relatively easy to make token-style currency using the smart contract function on the Etherium. However, writing secure smart contract code is extremely difficult and can only be done by experienced experts. Also, there are limitations such as having to pay high-cost network usage fee while still having performance issues of Ethereum network.
The SovereignWallet Network project: the MUI Meta-Blockchain
The SovereignWallet Network plans to create a genesis block of MUI Meta-blockchain and to launch the mainnet exactly 12 years after Bitcoin genesis block creation. This will realize the Hayek’s vision.
MUI Meta-blockchain is the first crypto money to complete Satoshi’s vision. It is a stable coin based on Algorithmic Central Bank system, that combines the decentralized cryptocurrency technology with the technology of digital currency of the central banks.