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XTRABYTES.TODAY Fulfilling The 3 Main Criteria for a Viable Currency

Discussion in 'Blog Posts' started by XTRABYTES, Dec 29, 2017.

  1. XTRABYTES

    XTRABYTES Well-Known Member

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    A recently published Cointelegraph article made me wonder if cryptocurrencies will ever be able to usurp existing fiat systems. What are the prospects that crypto will be able to serve as a viable currency?

    There is little question that the article’s observations about bitcoin are accurate. But could there be an alternative? Consider XTRABYTES, an ambitious project that is more platform than currency… How might XTRABYTES fair in relation to the known issues surrounding bitcoin? Sticking with the 3 main criteria for a viable currency from the referenced article, the requirements are that the currency

    • Function as a medium of exchange
    • Be a fixed unit of account
    • Be a store of value
    1st Viable Currency Criteria


    While the article correctly asserts that bitcoin fails as a medium of exchange, it fails to note the most substantial reason why. Namely, that its long transaction times make it nearly impossible to use as a medium of exchange. Unfortunately, one cannot simply walk into a store, pull something off the shelf, pay for it with bitcoin, and walk out the door. The transaction times take too long – sometimes taking hours. Until this issue is resolved, bitcoin will never be able to function in this manner.

    In contrast, XTRABYTES can handle several thousand transactions per SECOND. While Visa claims that they can handle 56,000 transactions per second they typically only process [​IMG]about 2,000 transactions per second. However, XTRABYTES is aiming to achieve 10,000 transactions per second. And while this isn’t quite on par with Visa’s claimed 56,000 transactions per second, it is well above their stated average. In addition, being that the blockchain works like a queue (ie first in, first out), XTRABYTES processes transactions very differently. Instead of transaction failures due to network congestion, processing would only be a few seconds delay at most until the blockchain catches up.

    Given such network congestion, once the Visa network fails then any transaction en-route fails. Assuming its 2,000 transactions per second average represents normal functioning, the XTRABYTES network should be able to handle 5x bursts of transactions within a single second. Even if this limit was exceeded, the network would catch up and complete these transactions once the pace of transactions slowed again.

    The network itself is also central to this comparison. For Visa, there is a centralized network that Visa controls and operates. The various points of contact on this network – the card issuing bank, the merchant’s hardware, and all the intermediary entities involved in the transaction – are all single points of failure. The transaction fails if any one of these points of contact fail, as happened to Macy’s on Black Friday.

    The XTRABYTES network is far more robust. Rather than being centralized and reliant upon a single node or provider, XTRABYTES’ distributed node network continues operating even if a local node – or many nodes – are turned off or having issues. In theory, this means that the XTRABYTES network is actually better suited to handle everyday purchases. As long internet connectivity to XCITE is available, sending and receiving XBY or tokens on the XTRABYTES platform should be exceptionally easy.

    This is really a criterion of its own – ease of use. No one wants to walk around with goats and ducks to use as trade. Ease of use is the reason we have money to begin with.

    With X-cite, sending requests and payments will be quick, and able to be resolved instantaneously. After a simple app download, XBY transactions will be possible with anyone else with the app. There are a lot of centralized payment apps already – Paypal, Square Cash, and Venmo being three of the most popular. X-cite will be the first decentralized app as well as the first that uses cryptocurrencies for this type of peer to peer transaction. While larger merchants – mall stores, grocery stores, retail chains, etc. – may be slower to adopt another payment method, X-cite will be perfect for immediate person to person payments. Craigslist or Facebook marketplace trades will be able to take place instantly and more securely than with cash (which can be fake).

    Thus, XBY fulfills the requirement for the first criteria; it functions as an easy to use medium of exchange which has the requisite transaction speeds to handle day-to-day financial transactions.

    2nd Viable Currency Criteria


    The next concern is whether XBY can serve as a fixed unit of account… and whether it can be used as a standardized measurement unit as well. In other words, can the currency operate as a “meter for money” – the standard unit of value? At present, bitcoin is far too volatile to be used as a standard unit of value. Its volatility undermines any confidence users might have about its stored value for any longer than a few minutes.

    While XBY is similarly volatile, the supply of its coins is far easier to control. In essence, there is a fixed number of XBY that is already fully distributed (650 million). Unlike bitcoin – which will continue to be “mined” for another few decades – the amount of XBY is going to remain unchanged. And while some of these coins may be “destroyed” or “lost” and others permanently taken out of available circulation, this number will never increase. As with bitcoin, the main driving force of value in XBY is scarcity – it cannot be duplicated or forged (unlike fiat currencies). Because XBY is already fully distributed, inflation by additional production is impossible. The remaining circulating supply of XBY will be self-regulated through the registration and breaking of the STATIC nodes.

    [​IMG]The goal is to have a circulating supply of around 100 million XBY, which is greatly reduced from the current circulating supply of around 430 million (the rest already being locked in STATIC nodes). These STATIC nodes will run the network by supporting XBY transactions and operating the Distributed app (Dapps) on the blockchain. As the price of XBY increases, the likelihood of a node breaking will increase. As the price of XBY drops, the desire to register a static node will increase. This constant cycle has the potential to the value of XBY – stabilizing the price – and allow it to become the theoretical golden meter of money.

    While the platform is still being built, it is hard to measure the value of XBY against anything else. In the past few weeks, its value has soared nearly 10x compared to the US Dollar, (from around $0.02 to over $0.20) and has increased nearly 10x its value against bitcoin (from 250 Satoshi to over 2000). Being that the full XBY platform has not yet launched, and its circulating supply remains large (the static nodes are not yet registered and online), its value is going to fluctuate for a while.

    Fiat currencies are also prone to these type of problems, particularly when the circumstances for hyperinflation exist (an impossibility for cryptocurrencies). Moreover, there are constant fluctuations of fiat currencies against other fiat currencies… and against stores of value such as silver and gold. If a currency’s value becomes static against all other things, it will be inflexible, and eventually cease to function as a currency. Supply and demand laws dictate that anything of value will increase or decrease in value as it is distributed. Some variance in value is to be expected.

    All that being said, it is currently impossible to use any cryptocurrency as a fixed unit of account. Bitcoin has in many ways become the standard unit of measure for other cryptocurrencies (due to its presence on all exchanges). Ultimately however, the valuation of bitcoin is transferred back into fiat so as to determine its true value. Eventually there will likely be a global currency that is used to measure/explain the value of real world items (i.e. a goat is worth 3 ducks… or 15XBY. Which makes a duck worth 5XBY…) With its existing infrastructure, it is increasingly unlikely that bitcoin will ever become that “meter of money,” and its inability to meet the first criteria – to be used as a medium of exchange – make it much less likely to hold this position going forward.

    And yet, the network supporting XBY makes it a strong candidate. The distributed exchange running on the XBY network will ensure that all other currencies have a value in XBY. If its price can stabilize once the exchange is up and running, it’s possible that XBY could become the worldwide standard unit of measure – the “meter” for money.

    Thus, XBY can fulfill the requirement for the second criteria; it can serve as a standard unit of measure or “meter’ for money, pending the launch of the X-Change module, and widespread adoption.

    3rd Viable Currency Criteria


    The third criteria states that currency must be considered a store of value. While closely related to the second criteria, the third criteria posits that – in addition to being a fixed unit of measurement – there needs to be a reasonable belief that the currency will maintain or increase its value over the long term.

    XBY is certainly setup to achieve this goal. The premise of registering a static node is that it will retain its value. At some point, the value of the nodes themselves may drive the price of XBY up. The XBY network is fully scalable and has nearly limitless value. As the platform is rolled out, the value of nodes will increase as D-apps get added to it. The platform itself will increase in value as its utility increases. The more D-apps running on the platform, the more value the platform will have. Right now, pending the launch of X-cite and the open registration for the STATIC nodes, XBY remains volatile, and it doesn’t yet meet this requirement. But going forward, as the value of the platform increases and stabilizes, XBY does have the potential to both store value, and stabilize its value.

    Thus, XBY has the potential to meet the third criteria; it can serve as a store of value, though it doesn’t at this time.

    Conclusion


    Unlike bitcoin, the value of XBY won’t be dictated merely by its scarcity and perceived value – but by the utility of its platform. Maybe XBY will never become a meaningful currency. Currently, no cryptocurrency is close to achieving this goal. But the major issues with becoming a currency are being addressed by the development team, and the platform XBY is being built upon is pushing it in the right direction.

    Once the platform is complete, XBY could become a truly viable currency. Or it may be better known for its platform, and – like bitcoin – be seen as more of a store of value than a day-to-day currency (and that function could be fulfilled with tokens utilized within the D-apps). Indeed, the platform is ultimately the reason I find XBY so exciting, and is the reason I’ve invested in it. Knowing XBY is being developed to bypass the issues Bitcoin has had in becoming a currency is a bonus.

    The post FulfillingThe 3 Main Criteria for a Viable Currency appeared first on XTRABYTES.Today.

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  2. fish313

    fish313 Member Staff Member

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    I really enjoyed this article. Thank you for posting here and on the blog site.
     
  3. Seb59

    Seb59 Member

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    Yes I also enjoyed it !! thanks a lot !! You're doing good for the community !!
     
    Last edited: Dec 29, 2017
  4. XBYToday

    XBYToday Member

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