Most of the world’s economies and monetary systems are managed by central banks (such as the Banco de México in Mexico). As a result, we have limited options when considering currencies and monetary systems.

In an attempt to overcome the limitations of existing centralized global financial services, we must think outside the box. Bitcoin demonstrated that we do not centralized financial systems run by our corrupt overlords. In the cryptoshere (the world of decentralized cryptocurrencies and economies), you have been empowered with the ability to choose between thousands of decentralized economies.

With that in mind, let us ponder about the possibilities.

With great power comes great responsibility

Which cryptocurrency portrays the right balance between decentralization and functionality? Which project contains the all-encompassing principles that led the decentralized cryptocurrency movement to begin with — transparency, immutability, accessibility and the ability to innovate without permission?

Without a doubt, Bitcoin remains a salient example of how decentralization can be implemented in a successful manner. Though as time has gone by, a new challenge has arisen: Funding.

A decentralized project requires dedicated people who are willing to contribute to the project. As such, outside investors were needed to fund the quest. Regardless of individual integrity, this situation introduces a centralized point of failure. As pointed out by Decred:

“With Bitcoin, the Core developers and Proof-of-Work miners are strong, centralized constituencies that can effectively veto changes to the consensus rules — other stakeholders in the Bitcoin ecosystem have minimal influence.” — Decred, Business Brief

To satisfy the principles of decentralization (a closer representation of nature), the idea and those behind it must strive to introduce a method by which the project can sustain itself — minimizing centralized influence — while sharing the outcome of choices made with those inhabiting the network — individuals who have skin in the game:

Why Decred?

Naturally, Decred became the cryptocurrency of choice for the purpose of this case study, as the project became a pinnacle example of how a cryptocurrency should be modeled — or at least close to it, as perfection is not a possibility even within nature. Adaptability is the factor which acts as the catalyst for nearing perfection (see Charles Darwin’s theory of natural selection).

A decentralized network should be anti-fragile, remain fluid, morphing with the flow of technology, economies, and needs — without requiring third party assistance.

The system architecture underlying Decred represents this fluidity through its innovative decentralized governance and funding system:

“Decentralized decision-making and self-funding have enabled us to build a robust, evolving digital currency, free from third party influence.” — Decred, 2019

While the principles of decentralization are important, this does raise the question: How useful are they in an economy of need?

Case Study I: Bitcoin

A recently published study involving close to 300 participants from Mexico City — organized by Entiende Bitcoin — examines various use cases of Bitcoin in Mexico and Latin America.

Store of value

The first part of the study suggests that one of the most promising use cases is the store value — the ability for people to store their savings in the form of cryptocurrencies. As indicated in the research:

“Based on an ~10x larger sample size, we now firmly believe that this remains the top use case for bitcoin and stablecoins in Latin America. >70% of our respondents believe that the peso will devalue vs. the U.S. dollar in the next 1–3 years…

Another interesting finding is that older Mexicans (45+ yo) are the most bearish on the peso and thus best able to intuitively grasp Bitcoin’s store of value use case. This makes sense as they’ve lived through Mexico’s massive devaluations in the 1980s and the Tequila Crisis in the 1990s.”

Alternatively, using a Bitcoin-based product like Abra, people can gain access to the US markets “that many readers may take for granted, such as: U.S. stocks, bonds, CDs…”:

“Abra now offers equities to 150 countries with $0 stock trading fees for 2019. This latest product is secure, affordable, and makes investing in US markets available worldwide.” — Abra, 2019

Remittances and international payments

The second part of the study indicated that due to the technical nature of cryptocurrencies, the barrier to entry was too great when compared to the benefits — saving around 15–20% on commissions.

As such, the study argues that “the international payments use case is not yet ready for consumer adoption (but is a great backend for existing remittance businesses)”. This argument has been supported by the use of Bitcoin in regions suffering from corruption, termoil, or centralized financial systems:

“…This could help explain the rapid LocalBitcoins volume increase in countries like Colombia, Venezuela, Peru, and Mexico.”

Challenges

Based on the study and personal experience, it would seem that education (or lack thereof) has a significant impact on how Bitcoin and other cryptocurrencies are perceived — as is the case with any new idea or technology:

“The two biggest challenges facing cryptocurrency in Mexico today are ignorance of the subject and association with scams. 40% of respondents had no opinion of cryptocurrency whatsoever. This is a HUGE opportunity to help a plurality of Mexicans form their first opinion of a new monetary system.”

Moving forward, a secondary study that I helped organize in the city of Oaxaca, Mexico.

Case study II: Decred

Aim

To better understand the perspective of people using decentralized cryptocurrencies for the first time.

Thoughts

I assumed that in a region where corruption is high and obvious, people would be dubious about a new financial “system”.

If people could witness some of the benefits, such as being your own bank without giving away your identity, then perhaps adoption would become the obvious choice. As for the intangible experience, I believe having an open discussion will help ease people towards a greater understanding.

I was hoping that the participants could experience the tools of enslavement reversing their roles to become tools of liberation.

Procedure

Some of the subjects that were discussed:

• What is money and how the fractional reserve banking system works.
• What are some of the existing issues surrounding our global financial services and systems.
• The damage centralized systems can cause and have caused.
• The importance of decentralized public blockchains vs centralized private blockchains.
• The impact such tools can and have had on the 1.7B people who are classified as unbanked.
• Discuss privacy, captology, and free software.
• Top-down approach vs bottom-up.
• Examples of decentralized governance and the impact this has had.
• Give examples of some decentralized tools and why they are important.
• Discuss the rapidly growing sharing economy.

Apart from the presentation, the venue owner’s tablet was equipped ‘Coinomi’ wallet, so that people could pay for drinks with both Decred and Bitcoin. Furthermore, I introduced the owner to the technology, the benefits, and a quick tutorial in using the application.

Each participant was also asked to download the Coinomi wallet, so that they could be sent enough Decred to purchase one drink.

Results

The presentation included around 30 to 40 people. One comment in particular had a significant impact. A lady commented that “most of the conversations around the topic had turned her off of cryptocurrencies, though after coming to this talk she is inspired to further explore it”.

I would have to guess — due to my own experience — that she had attended events where people rarely focus on the greater good of decentralized technologies and instead try and sell their own version of it. Overall people were excited to be using a cryptocurrency for the first time.

Limitations: A great number of people did not appreciate having to write down essential keywords (the private key), required by most secure wallets. Perhaps using paper wallets, plastic cards, or other methods would prove more successful in welcoming new users.

These barriers require further work, though hopefully, their solutions do take away from the benefits provided, as we live in a world where freedom, security, and privacy has been exchanged for convenience.

An important part of decentralization is personal responsibility. This means that we may need to educate ourselves — “with great power comes great responsibility…”

As mentioned earlier in the article, Decred’s framework includes an inbuilt decentralized governance and funding system. Some people expressed their interest and wanted to learn more about it. Others wanted to know whether such a system could be corrupted. To address these comments, we can refer to the system architecture which has been designed with security, privacy and inclusivity in mind.

Mexico is a region where cash dominates. Financial services are reinventing the wheel while existing distrust issues regarding financial institutions and centralized organizations are yet to be resolved.

Existing services and organizations do not offer the same level of benefits, ownership, freedom, and privacy that cryptocurrencies do. Perhaps if people understood the power that has been given back to them via decentralized cryptocurrencies and systems, they would more inclined in learning about them.