A crypto entrepreneur is proposing a new definition for understanding Ether, the native asset of Ethereum, which he calls, “the best model for money the world has ever seen.”
David Hoffman, chief of operations at RealT, a tokenized real estate platform, uses data from roughly the last two years to map out Ether’s role as the key gear powering Ethereum to create a new internet of value and a new digital economy.
“Ethereum is a foundation for building an alternative Internet-based financial system. This financial system has the capacity to be completely open and trustless.
This new financial system needs a native money to operate. Financial applications in this new landscape need a trustless form of collateral for their operation, and the only truly trustless asset on Ethereum is Ether.
As a result of this demand, Ether has become an economic-trifecta; a ‘triple-point’ asset, satisfying all the requirements that a new economy needs, all at once. As a result of this, Ether has become the best model for money that the world has come up with.”
Hoffman details how products and services like Netflix, YouTube, Google, Facebook and Instagram rest on top of one layer of the internet: the HTTP application layer.
These applications have powered the Age of Information with an endless stream of data – from videos to tweets to live streams to images. All of this data is cheap and easy to distribute through digitization. You send an image or an article to a friend who can copy/paste it, remix it or share it with somebody else. Two days later, you can do the same thing again, sharing it with more people.
But Bitcoin changed the game.
Writes Hoffman,
“For the first time ever, when you sent something on the Internet, you could no longer keep it yourself.”
Hoffman adds,
“However, with Bitcoin, this is only true if you are sending bitcoins; the Bitcoin protocol only provides scarcity to bitcoins, nothing else.”
The critical distinction between Bitcoin and Ethereum is how Ethereum facilitates all types of data exchanged on the internet, effectively becoming “the value layer” of the internet.
“This is where Ethereum comes in: a platform for providing digital scarcity for any digital asset. Ethereum gives the power of digital scarcity to more than just its own native currency…
Because of its permissionlessness and openness, any asset can come to Ethereum and use it for management of its scarcity and settlement between parties.”
Ether fits into the puzzle as a capital asset on Ethereum – the “internet-native global settlement layer for digital assets.”
Writes Hoffman,
“In its capital-asset form, Ether is:
• A share in the Ethereum Network, a decentralized institution
• A claim on Ethereum’s fees
• The right to produce work for Ethereum”.
As the economic engine of the network, Ether is used in decentralized applications that now exist in an open and global financial environment. Ether is consumed any time activities are completed on the network such as moving assets, generating loans, exchanging tokens and executing purchases.
Unlike financial services and products that operate below central banks, Ether generates permissionless financial activities on Ethereum, continuously shifting power and control away from the centuries-old banking system toward a technologically advanced, open and new finance movement.
You can check out Hoffman’s full post here.