CBDC ?— THERE IS ONLI ONE
CBDCs are necessary to preserve the role of central bank money as a stabilizing force at the heart of the payments system and to safeguard monetary sovereignty. A CBDC would preserve the coexistence of sovereign and private money in a digital world. The question of whether central banks, multinationals, and private enterprises should issue digital currencies, is not a question of why, if, or even when, it is now a question of how. There are fundamentally flawed assumptions about using Blockchain DLT based stable coins to do so.
We will start with first principles because no technology, no invention, no amount of cleverness is going to change the physics of a thing. It is also important to make a distinction between “medium” — the asset being exchanged — and the “exchange mechanism” — that is, the method or process that transfers the asset.
Let us first examine the medium: the stable coin. We will define a stable coin, as a medium of exchange, the value of which, is determined by assets or pool of assets, held specifically for that assurance of the value.
A stable coin is not really a coin at all, that’s a misnomer. Crypto is a ledger entry + password (private key), The password lets you make changes in the entry in a public ledger. While that’s cool and valuable as a collectible and maybe even scarce, that doesn’t meet the standards of a financial instrument. A ledger entry, conventionally, is an accounting, a count of, something tangible “that exists”. This is one of the fundamental assertions of accounting: the assertion of existence. A ledger entry that is just an entry in a ledger, in and of itself, cannot be used as a methodology to assert anything exist, because it is not an accounting “of” a thing. The value of the “ability to make entries in a publicly held distributed ledger” has some benefit to some but this is, at the furthest stretch, an accounting, a count of, something intangible. CBDCs must be at their very minimum a measure of a tangible value, in order to be a medium of exchange.
No technology is going to defy the laws of physics. Finance is a science because it is based on accounting, which are its laws of physics. Accounting & Auditing are three fundamental assertions: The assertion of rights and obligations. The assertion of existence and The assertion of valuation The root of all accounting assertions come out of a fundamental concept of ownership. Ownership is a bundle of rights: established by legislation (law) and enforced through regulation. An asset is, at its very definition, property owned by a person or company, regarded as having value and available to meet debts, commitments, or legacies. The root of all property rights comes down to one thing, proof of exclusive ownership or commonly called title. Accounting is at its root, a record of title, the rights and obligations in relation to, and a conceptual framework as to how this can be valued. This conceptual framework is used for the professional preparation and auditing of financial statements and accounts. This amends the difficulty of establishing a true and fair value of an enterprise and its assets, for the needs of investors, employees, governing bodies, and other stakeholders.
DLT platforms are fast becoming a dominant exchange mechanism. It is important here also to understand the underlying problem this technology is purporting to solve. At the most fundamental level, the web is a network of documents, stored in a hierarchy, on a network of computers. That is a very important distinction to understand. This works well for text, images, and videos. You can store information and move it around and that changed the world. Although keeping copies safe is still problematic. Security will always be hard on the web. The web is open and data is public-by-default because it is a sharing technology. One thing in particular that the web infrastructure does not work well for is a class of communication called value or a better term is an asset. An asset is defined as property owned. The exchange of any asset that is of value to someone requires something that the web was never built for; control. In 2009, an idea called decentralized blockchain ledgers, the idea behind bitcoin, in order for it to work, also, had to solve this problem. How to store assets on a computer, move them around, and keep them safe. The bitcoin approach. stores transactions in a dual entry ledger. It uses the web to move the ledger around. To get around the copies problem, the inventors of bitcoin came up with a clever mechanism, the holders of the ledger would come to a consensus about which copy is correct, and to keep it safe you use anonymity hashing and cryptography. The effects of this, which is what most people debate, trustless, price, etc, are the vagaries of the “meaning” of the technology. We are concerned with what the technology “is” rather than what it “means”. What it “is”, is an inventive approach to solve the hard data science problem of, how to store value, move it around, and keep it safe.
Now all of this, copies of ledgers, and consensus as to which copy is original, all take tremendous computing power. The innovation of bitcoin was an infrastructure sharing scheme called mining and the incentive is crypto. Crypto is the reward gas for driving the engine that processes transactions. This approach, while it’s become a phenomenon in the last few years doesn’t actually solve the core problem, it works around it. This workaround violates the fundamental assertions of accounting, the “laws of physics” for the science of finance. It is just a ledger entry and a control scheme for making entries in the ledger. Also, it turns out that, dedicating tons of computing power just to compete to process a transaction is not a viable long-term value proposition, nor is it good for the environment, it drives up the cost and ultimately no one wins.
To truly build a CBDC, we must consider the “medium” — the asset being exchanged — and the “exchange mechanism” — that is, the method or process that transfers the asset. Crypto and DLTs are not viable for some fundamental reasons. The concept of a global transaction processing network, where people compete to process transactions. The exhaust of this, a private key, a password to an entry in this ledger, is bought and sold, while it is innovative, it does not meet the basic standards of financially viable.
There is another way. Bitcoin started in 2009 and Onli in 2010. Onli is a full stack of technologies that makes it possible to create and maintain an object, across a network of connected devices, of which, there can only be, one. We solved the scientific problem of uniqueness quantification in computing and therefore we never needed to work “around” the copying problem of technologies on the web. Onli was built by finance professionals for tokenization, from the start. Onli is the original code. We are not bitcoin or erc20 or eos or a clone, copy or inspired by any of those kinds of things. Onli has nothing to do with “the blockchain”. The bottom line is Onli is not Crypto. Onli is a digital asset technology. Yes, Crypto is a kind of digital asset but not all digital assets are Crypto. Crypto is one thing. Onli is another. With Onli you get all the benefits of crypto and none of the problems.
Species is a stable coin technology by The Onli Corporation. Species was an Onli use-case for tokenized deposits. The principle is simple the tokenized deposits represent a one-to-one claim on the deposits in a commercial bank, The proceeds from the sale of the token are deposited in a commercial bank. The buyer of the token may sell it on the marketplace to any buyer. If there are no buyers then the seller has the option of “redeeming” the claim on the proceeds from the first sale. This assurance of value is realized by making the deposit balance visible to all members of the marketplace.
There are three fundamental distinctions that make Specie the right technology for a CBDC.
1. The medium fits within accounting and regulatory frameworks as a financial asset.
2. The exchange mechanism is an actual possession technology not an entry in a ledger. It is a digital version that works exactly like the coins in your pocket do. There is only one and you physically move it from person to person.
3 Operational certainty that the liquid assets will remain available to meet the claims of the token holders. The proceeds from the first sale go into an Assurance Account. The Assurance account is visible to all members of the marketplace.
4. There are also numerous practical reasons like the fact that Species outperforms nearly every category of digital technology in every category that matters. Onli is fast, final and it cost less than every other technology. There are no transaction fees.
Onli is the right technology, the right “medium” and “exchange mechanism” to implement a CBDC. With OnlI, You can get all of the benefits and none of the problems. You can also do a lot more. Species is more than a better digital asset class. It is a better class of asset.
