Redefining Money with Ergo: The Evolution from Centralized Control to Decentralized Possibilities

Hackathon News
Ergo Platform

August 20, 2023

The extensive developer activity on the Ergo Platform over the last several years has positioned it to be a leader in decentralized technology. With its powerful scripting language and eUTXO design, developers enjoy an impressive array of tools from which to launch new products and services. This October, the Ergo Foundation will host the latest ErgoHack where developers and crypto enthusiasts will have the opportunity to design and build new decentralized applications on Ergo. The evolution of money has already begun. What new decentralized applications will be built on Ergo to propel the next chapter of the money evolution?

How many of us have ever questioned the medium by which we exchange goods and services? If you want to buy an apple, you simply pay for it with either cash or card. Voila, the money in your pocket (or bank account/credit card) enabled you to acquire that apple. Since you were born, money and credit have been the medium by which you access shelter, necessities of life, transportation, education and healthcare (depending on your country), and luxuries.

The institutional system (ie. banks, credit providers, central banks, etc) of cash and credit is deeply entrenched in our daily lives, and since the digital era, that system has become even more of a gatekeeper to the growth of personal wealth. All money flows through them, and they alone dictate how, when, and where you can use your money. This can include account fees, trading fees, convenience fees, wire transfers, currency conversions, and access to funds.

If you think your personal bank account is 100% safe, then you are simply unaware of the systems of control enacted by these institutions. If you wanted to make a significant cash withdrawal from the bank, you might be surprised by that bank's cash withdrawal policy. What if you live in a country where political instability is imminent? One need simply look at history to see how central bank currencies have fared under political duress or wartime.

If you need to make a large purchase with your money, chances are your checking account has a daily debit and withdrawal limit. In that scenario, your bank may suggest you use your credit card, but then you are accessing their credit system and are pigeon-holed into how you can pay for goods or services - technically, you are not using your money.

What if your bank collapses? What happens to the money you have been saving your whole life? You may want the bank to provide security for your money deposits, but a centralized institution that holds custody over YOUR money may not be able to fully protect or guarantee your money. There are limits to how much an organization like the FDIC (Federal Deposit Insurance Corporation) will insure account deposits.

So, are traditional institutions the only avenue for money? To ask such a thing is to question the very definition of money in our modern society. Have we reached the peak of the potential of money with the current traditional systems, or is there room for money to evolve beyond its current constructs?

Bartering and the most basic forms of trade formed the earliest standards for an exchange of goods and services. With the digital era, centralized bank currencies have evolved to include online banking and digital payment systems on the internet. Even corporations and credit card companies have evolved the definition of money with points programs that allow people to exchange their loyalty rewards for goods and services.

Traditional money has evolved, but so have the systems that control it. Is there room for a money revolution?

The advent of blockchain and Bitcoin has sparked a debate on what the future of money and finance looks like. With decentralized, distributed blockchain ledger, we have seen new potentials in the security and transparency of what can have value. Using smart contract platforms, everyday citizens have access to new revenue streams, including lending protocols and liquidity pools on decentralized exchanges - essentially, they can become bankers.

Ethereum was the first to open the door to the potential of smart contracts. However, high gas fees and the inability to maintain liquid custody of staked coins have made the platform cumbersome to use, especially those who do not have expendable money to pay for gas fees.

For money to evolve such that it is fair and equitable for all, the industry needs to continue pushing the blockchain revolution. How can blockchain better the lives of the ordinary person? How can blockchain technology progress so the tools and products it provides have a low barrier of entry? The average person does not want to have to learn a new skill set in order to execute their financial choices.

Whatever blockchain platform can offer the necessary solutions will have a significant advantage with mainstream adoption. The Ergo Platform is an open source, Proof of Work blockchain. Its core developers have extensive experience in blockchain design and construction, and even Charles Hoskinson has indicated that he considers Ergo to be the “spiritual successor to Bitcoin.”

Throughout the recent bear market, Ergo has witnessed consistent large-scale development with numerous community dApps and wallets being constructed. The blockchain is known for its unique and innovative technology, including NIPoPoWs, Storage Rent, miner governance, and much more. Ergo’s DEX, Spectrum Finance, has recently taken the first steps towards achieving cross-chain interoperability with Cardano. Additionally, Ergo’s Rosen Bridge will soon be activated and will enable native asset swaps between Ergo and Cardano. Following the Cardano launch, work will continue on Rosen to bridge Ergo to multiple blockchains (Ethereum, Bitcoin, etc.). All of Rosen Bridge’s security assumptions will be performed on Ergo, offering a new security paradigm and revolutionary way to bridge assets between various blockchains.

The Ergo Platform is laying the foundation for an extensive network of blockchain infrastructure. The blockchain’s open source tooling has created SDK’s and existing smart contracts for developers to utilize and deploy for their own dApps. Now is the time for developers to seize the opportunity to build on one of the most robust and secure networks in the industry. With its eUTXO model, it marries the smart contract functionality of Ethereum with the time tested design of Bitcoin, all while ensuring that transaction fees remain at a low cost to the user.

The future of money is in its ability to be functional. With blockchain technology, we have a chance to evolve money in a way that improves access to financial systems and products. With decentralized technology, blockchain has the potential to remove the gatekeepers of traditional financial products and open new possibilities for how people use their money.

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