2.6 KiB
Challenges
Existing incentives do not align with financial stability. A forensic analysis of data representing the performance of the traditional financial system over the last 60-70 years reveals staggering faults, including the realities of rate changes and their effects on the imminent catastrophe of inflation. The misuse and abuse of the equities market has resulted in the collapse that we have now seen evidence of the onset of.
Over the last century, we’ve seen rapid inflation creating an absolutely inhospitable environment for not only growth, but even for the most basic of sustainability for the now near-extinct middle class in the US, for example. This, however, is an issue occurring on a global scale and inflation is contributing to a troubled outlook for the global financial climate unlike any seen before.
A review of S&P 500 data in the 1960’s reveals that an average company would maintain their status on the index for an average of 34 years. Today, that same measure yields a figure closer to an average of 10 years.
The aforementioned issues are the symptoms of extreme centralization, which through its pursuit of efficiency has simultaneously led to a dearth of opportunity for the vast majority of the population to achieve any degree of financial freedom. Conversely, we have a near-total lack of the efficiency-inducing features and security measures found in a centralized system with decentralization, but an environment that is immeasurably more hospitable to the growth of wealth and the ability to maintain that wealth. Decentralization also offers many other benefits like anonymity, cost-efficiency, speed, and user control through the use of a DAO to govern a project democratically, among others.
What it presents is the challenge of finding the sweet-spot on a sliding scale between centralization and decentralization, where the amalgamation of ideologies from both schools of thought can lead to a product and outcome not otherwise achievable by either system independently. The relationship between viability and resiliency must be delicately balanced. The nascent nature of the industry is enough of an explanation for that phenomenon, the evidence of which can be detected by examining the practices around taxation, security, privacy, and more.
When subjected to scrutiny, it is evident that existing decentralized products are not generally very thoughtfully designed. The nascent nature of the industry is enough of an explanation for that phenomenon, the evidence of which can be detected by examining the practices around taxation, security, privacy, and more.