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Modern Economic Nonsense — Payment apps move away from the fiat currency

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The world’s financial system is becoming increasingly digital, and numerous payment apps are cashing in on the trend. PayPal, Chase QuickPay, and American Express are just a few companies offering digital wallet solutions to make it easier for consumers to pay with their cards. These types of solutions can be beneficial for those who don’t have bank accounts or access to a brick-and-mortar location. Most people rely on credit card payments as their primary method of financing purchases, making digital wallet solutions a popular solution for remittance services and micropayments. Understanding how these payment apps work helps us understand how traditional ways of making money operate. We all need money to live our lives; it’s also something you can exchange for goods or services from someone else. Many new payment platforms are moving away from fiat currency because the banking system isn’t keeping up with how quickly things are changing.

What is money?

Money is a commodity that represents the first and most important store of value. Money is what allows us to exchange one good or service for another. It’s also an easy way to measure value and an indicator of economic activity. For example, if we see more money in circulation, it means that more goods and services are being traded. Numerous types of money exist today, including fiat money, digital currency, and cryptocurrency.

Fiat currency and how it works

Fiat currency is money that is backed by government regulation. A fiat currency is also called a paper money because it’s made up of paper bills that are recognized and accepted as payment in exchange for goods and services. Fiat currency has no intrinsic value, so it’s simply a piece of paper that the government has authorized as a legal tender. The paper itself has no actual physical value. The most commonly used fiat currencies include the U.S. dollar, the Euro, the Japanese Yen, and the Chinese Yuan. Fiat currencies can also be created via central banking, where the central bank creates fiat money through open market operations. These types of operations are carried out by the Federal Reserve, Bank of England, and Bank of Japan. The central bank places a purchase order for various government-issued bonds, thereby creating new money. This type of money is also known as a fiat currency because it’s simply a piece of paper backed by government regulation.

Decentralized Currency

Another type of money is a decentralized currency, which is a form of digital cash. Examples of decentralized currencies include Bitcoin and Ethereum. Decentralized currencies are not controlled by any one entity and exist as open-source software on the blockchain. It’s really important that you understand that blockchain is not just about Bitcoin. Blockchain technology is being used to create decentralized currencies like Bitcoin, Ethereum, Litecoin, and other newer currencies. Bitcoin is the first decentralized currency ever to exist, and it uses the blockchain to store and transfer money.

How Digital Wallet Apps Work

Digital wallet apps allow people to send and receive money through a mobile app. The app can be accessed either via a mobile device or a web browser. The app automatically links to a person’s bank account and then allows them to send and receive money as needed. Users can also use the app to send and receive payment requests, such as peer-to-peer payments and loans. Digital wallet apps make it easier to use digital currency because it’s decentralized, making it difficult to use conventional payment methods. Digital wallet apps vary in the number of supported cryptocurrencies, payment types, and features. Some of the most popular digital wallet apps are Venmo, PayPal, Apple Pay, and WePay. The merger of decentralized and centralized currency allows more users to join payment apps and have many options to pay out their purchases.

Conclusion

In order for a society to thrive and grow, people need to be able to exchange things for other things. Without a way to trade one good for another, no one would have food to eat or clothing to wear. Scarcity, such as food and clothing, is what allows us to have money as a store of value. Money is a commodity created by a government, which the people have authorized to represent the value of the goods and services being traded. But money is changing fast, and the banking system isn’t keeping up. Digital wallets are becoming more popular because they allow you to send and receive money without going through a bank. You can also use digital wallets like Venmo or WePay to make peer-to-peer payments.

Reminder: I am not your financial advisor. 

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Crypto Research

The Future of Machine War II

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In late 2021, I wrote an article about A.I. vs. Blockchain. I realized it was closer than I expected.

https://medium.com/@xuanling11/artificial-intelligence-vs-blockchain-the-future-of-machine-war-b685d208ba20?sk=874af90c7acbe857fa004c0ebe0d5e28

Web2 is leading a future of technological centralism. 

The way we see the world in ancient is what we saw became what we believed. Later, the enlightenment process helped humans realize what they had seen was disguised by the nature principle. Once we tested our assumption and received accurate results, we thought we had mastered the nature principles. Yet, we did not make the world better than we thought we could. 

We are living in a world in which companies know more than you than yourself. Companies can likely tell you what you should believe without letting you know. 

The secret weapon that companies like Google invented is A.I. or Artificial Intelligence. 

If A.I. can think like a person, it can easily replace you! Since companies got all your data, you freely offer them by using their free services, and they can replace you one day without you realizing it. 

Without all conspiracy theories behind what Google may or will secretly develop, A.I. reaching consciousness is … impossible.

If it does, Google has successfully made a human – dumb!

The most advanced A.I. – Tesla Autopilot Program cannot distinguish objects between humans and other moving objects during driving.  

Using technology makes people dumber than they think because it takes away your consciousness – the ability to think uniquely!

Blockchain is the future of decentralization.

We need a peer-to-peer system to regain consciousness and break the chain from Web2. 

It gives individuals the power to rethink information.

Think about today’s media; all information is filtered to offer readers without any surprise. News is data that Web2 selected specifically for you to read. 

We need a decentralized system so that you can receive unfiltered information and gives you a surprise that sparks ideas of imagination.  

Web2 is afraid of the blockchain because they are too big to fail. 

 They mimic the blockchain by creating a centralized node system – social media network. 

It is a net growing outward through a single point. Only the problem is that connection is facilitated by technology. And the biggest failure is such technology has a single point of failure problem. 

And they cannot escape the law of economics – the law of diminishing. So we will see Web2 grow slower due to the law of diminishing that they require more data with few increments of advancement through A.I. without any breakthrough because A.I. is a deterministic system that works with a lack of randomness. 

In Web2, they assumed everyone was stupid, and they offered solutions to everyone.

In Web3, everyone is good and should anticipate solving a problem together.

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Photo by Aideal Hwa on Unsplash

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Crypto Research

Financial sanction to mixers

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Have you heard about financial sanctions from the US on virtual currency? At least, I have not yet. But the US Department of Treasury has issued sanctions on two crypto services: Blender.io and Tornado Cash.

To clarify, the US sanctions on tools but not target specific entities or groups of people.

So why bother to sanction something that the government probably won’t be able to sanction in the first place?

What is a mixer?

A cryptocurrency mixer, sometimes referred to as a tumbler, is a tool for money laundering. The sole purpose of the invention is to make transactions untraceable.

How to mix?

Even crypto is pseudo-anonymous, but it is traceable through your wallet address. A mixer is a black box service to filter your traceable wallet address into the untraceable wallet address.

How to wash your money clean in the traditional way?

https://dimensiongrc.com/the-stages-of-money-laundering/

The assumption is you will not get caught at each stage, and then you place your dirty money in a bank through companies and use the funds to purchase legal goods like houses or luxury goods.

There are mature regulations and rules to stop you from putting your dirty money into banks.

Digtial money landury

https://www.eurospider.com/en/know-how/compliance/211-what-is-a-cryptocurrency-mixer

A Crypto mixer or tumbler is a service to pool dirty digital currency in their favor and redistribute it into designated wallet addresses or addresses randomly generated. 

It is a challenge to stop transactions because there is no entry point for law enforcement to stop at each stage. 

https://home.treasury.gov/news/press-releases/jy0768

Ultimate Mixer

Tornado Cash is the king of the mixer. Unfortunately, there is just no way to trace transactions anymore. It is a smart contract with zk-SNARKs (zero-knowledge proofs) that does not require revealing a wallet address during transactions and ghostly distributed funds without leaving any traces.

This tool is the ultimate weapon that the government has to shut down, or there is no way to prevent transactions.

In Conclusion

Let’s change the future – legally. 

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Crypto Research

Why there is not crypto banking exist

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We have always heard about cryptocurrencies, crypto exchange, banking, and trading platforms, but we do not really grasp the idea of crypto banking. Crypto banking is a contradicted idea. If crypto is to replace banks and give users full control of digital money, why do you put your crypto into the bank? The new research paper argued that there are risks for banks to adopt crypto, but they did it anyway.

Banks want crypto

Cryptocurrency has a rough road at the beginning and continues to experience a bumpy road ahead. The institutional investors were watching its performance. In early 2017, institutional investors had opportunities to adopt crypto, but they found out the return of the investments was less than traditional financial assets. Regulations were not a concern for some individual institutional owners, but banks were conservative at the time. As a result, some investors adopted it in early 2018 than banks did. Then suddenly, the crypto market took off in 2020, leaving many banks to regret their decision in 2017. Many banks set up their digital investment group to rush into the market and increase prices. Of course, many of their investment positions are instead of shadow positions. It is unclear how much they have been invested in and what vehicles they took to invest in cryptos.

Crypto Exchange

Crypto exchange is a bank-like platform for crypto. Banks offered a place to purchase fiat currency. Crypto exchange did the same duty as traditional banks did. Since there was a gap between the crypto and banks, the crypto exchange took responsibility and offered crypto services. The crypto exchange took off after 2020, and they left banks in the dust. Then, crypto winter came in early 2022, and banks again hesitated to enter the crypto and started denouncing crypto usage, particularly in the Defi area. But interestingly, they tried to find ways to get into crypto without being directly exposed to cryptocurrencies—hint: through hedge funds.

How much banks exposure to crypto

We do not know how much banks have been exposed to crypto. We learned that the big Wall Street players were exposed to the services of the digital asset through State Street of their $41.7 trillion assets. Some have been exposed due to Luna’s collapse and 3AC bankruptcy. But again, no specific dollar amount was provided. 

Survivors

Since the crypto winter, institutional investors have been cautious about crypto exposure. However, crypto exchanges are the winner again. They are exposed to crypto and take risks more than banks do. As a result, they likely will weather the uncertainty. Furthermore, there is no need for crypto banking to handle your crypto assets since many such services will not survive long in the crypto environment. 

Crypto is resilience

Despite its fluctuating price and unsecured assets, crypto is resilient to phase out any bad business ideas and bad actors in the economy who wants to or try to dominate the market but who transfers risks to users to believe they are the one who should take responsibility for their carelessness. Unfortunately, those business models will not survive long.

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