I have been seeing how many central banks and global institutions such as the IMF or the BIS are narrowly looking at Digital Currencies.
The authorities or incumbents researchers gives for granted that all 3 functions of money cannot be (or should not be) separated in a digital currency. They give for granted that the definition of money is set in stone. They negate the reality that the 3 functions of money have been in continuous un-bundling and re-bundling according to the societal evolution.
For this purpose I created the "Digital Power Ring" to help leaders of this world to understand better the shift in power game of digital currencies.
Y axis: How we behave as humans as selfish and selfless individuals to fulfill our most basic low level needs for survival and our higher level needs for self-actualization as per Maslow's hierarchy of needs.
X axis: How we use assets as a means for fulfilling our needs, either as tangible (physical) or Intangible (Emotional).
We end up with 4 quadrants
Selfish Socialist = Bartering
Selfish Individualist = Physical Asset Based economy. (Salt, Gold, Silver, etc.)
Selfless individualist = Analog asset based represented economy.
Selfless Socialist = Analog/Digital Fiduciary based (FIAT) economy.
The evolution of the 3 functions of money
The 3 function of money are represented as diamonds and the journey for each function as per the evolution of what’s value means to fulfill the increasing sophistication of human behavior.
Selfish Socialist: Focus on medium of exchange, fragmented and non standardized. Value exchange is paramount, money is non existent, pure bartering.
Selfish Individualist: Focus on standard medium of exchange and store of value. We started seeing some kind of unit of account standardization.
Selfless Individualist: Focus on consolidation and rationalization of medium of exchange and store of value standardization.
Selfless Socialist: Consolidation and rationalization by tightly bundling the 3 functions of money and what current modern economy defines what’s means money. Social belonging becomes more important than the truth. Hence the creation of emotional money: Value as the representation of faith (societal belonging) becomes more important than the truth (a peace paper worth nothing).
The dotted line represents the cyclical change toward a neo economy, going back to Selfish Socialist value. This is what I call "Native Digital Asset based economies".
The 3 functions of money are following the same evolutionary pattern in the cryptocurrency world
From Medium of exchange to the consolidation as an store of value to ultimately become a unit of account:
Public blockchains as “Medium of exchange”: As a secure way to exchange value in a peer to peer way enabling Global access to FIAT liquidity.
Public blockchains as "Store of Value": As an alternative native digital asset. An asset with no counterpart liabilities enabling the re-balance between a Debt and an Asset based economy.
Public blockchains as "Unit of Accounts": As recyclable systems of trust (there will not be a single de-facto public blockchain) . We will be using public blockchains, abusing them to finally cause a digital diaspora toward a new one.
The international trade war to control the de-facto FIAT money (USD vs. RMB ) will play a key role for digital currencies transition.
Humans created the internet as the very first pseudo anarchic digital ecosystem enabling the un-bundling and re-intermediation of information services. Public blockchains are pseudo anarchic digital ecosystems enabling the un-bundling and re-intermediation of value services; Stablecoins and De-Fi are early signs of that.
As a conclusion, central banks keep trying to reinvent the wheel by doing a cosmetic name change: from e-money to CBDC.
For more references
The rebalance of Human's needs
Blockchain and the Illusion of Exterminating Central Powers.