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Goal alignment in crypto is way better than in fiat

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by COINS NEWS 80 Views

One of the issues with fiat currency is that there is no goal alignment between those that use or hold it and those that control it. As a holder/user of USD, my goal is to not have my USD debased, to not have my usage of it restricted. The goal of the Federal Reserve however is, amongst others, stable prices with ~2% inflation (in the US). As a holder in the US this doesn't align with my goals, as a holder of USD in another country it aligns even less.

As a BTC holder my goal is again to not see my BTC debased, to not be restricted in my usage of it, for it to be secure, for it to be easy to use etc. Miners' goals largely align, they get paid in BTC so they generally want prices to stay up. They don't care that much about it being easy to use though, more fees = more money to them. In terms of security, as a user my goal is decentralization, as many parties as possible required to censor or doublespend. Miners would prefer to see their own share of hashrate grow though, so they make more money. Their goal is profit, and BTC is just a way to do that. If they could make more money by opening up a short on BTC and censoring the network they'd probably gladly do so. So miners and users are more aligned than in fiat, but also adversarial in a sense.

In PoS my goal is to not see my coin debased, not be restricted etc. Stakers however would like to see more income, from fees + inflation. Kind of similar to BTC in that sense, and they'd also like to have a bigger part of the staking income for themselves rather than going to others. If I hold a PoS coin and have to choose who to stake with, I probably just choose the highest APY one, even though that might make the system more centralized. My individual contribution doesn't matter much, so I should just take my profit. One important difference in terms of goal alignment is that while stakers' goal is still profit, it's hard to do that by opening a short and then censoring, because you need to actually hold the coin. So that seems more aligned than in Bitcoin, still some adversariality but lessened.

Another example I was thinking about is Nano. Same goals for the users, to not see the coin debased, not be restricted etc. However since validators don't get paid (no inflation and no fees) there seems to be quite complete alignment between all parties. As a validator you're not validating for the rewards, you're purely doing it because you want the network to be as secure as possible. So it seems it removes the adversariality, and has total goal alignment.

What other chains have good goal alignment? And do my characterizations of goal alignment in fiat/crypto make sense?

submitted by /u/thenrepent
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