Many over complicate the monetary and financial system. For all the theories as to why it works, or does not, they all seem to overlook the most basic essence of the discussion.
When it comes to these matters, there is one thing that keeps it all together: trust.
No matter what we are dealing with, if the trust is gone, the system collapses. Throughout history we see different ways systems were designed to try and instill that. In some instances they were highly successful, others not so much.
Consider the point of insurance. This is a mechanism that provides trust. People feel safe because there is something backing it.
That works well until the trust is destroyed. Look at the Great Financial Crisis. That was caused by a run on collateral by the world's financial institutions. Suddenly, the trust in what was promoted as solid collateral, mortgage backed securities, came into question. Of course, there was insurance in the form of another derivative. Yet, the system broke down when the insurer, AIG, was unable to backstop the losses.
It all worked well until it didn't.
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Blockchain Is About Trust
The idea behind blockchain is that it brings another level of trust to the table. We see how valuable a permission-less, transparent ledger can be. All transactions are open and cannot be hidden.
Blockchains that are decentralized also cannot be altered. This also provides a great level of trust. We know that once a block is validated and accepted across the network, it is immutable. We can trust the data that is there.
With this foundation, the idea is to build upon it. Once we have the base layer of trust, we can see how other opportunities open up. By tying into a trusted ledger, the hope is the application that is pulling the data can convey a similar level of confidence.
Of course, as we see, that is not guaranteed. Confidence can break down as markets get wind of issues. Since we are in the early stages of development, the markets are going to test everything that is out there.
For this reason, those projects that survive have to overcome whatever is thrown at it. Bitcoin was attacked for years and is still standing. That is the goal of all other projects.
Trust is very fragile as we see. Therefore, we all have to take the steps to keep building it.
Hive's Main Focus
Everyone wants instant success. The story of LUNA and UST really got people salivating. There is good reason. If billions of dollars suddenly show up, people get excited. Those who are not involved obviously want a piece of that.
That said, as we saw, it can leave quickly. Billions can be eradicated in a day or two. The challenge, above the monetary and financial impact, is whether trust can be restored. Like any relationship, once it is dinged, it is hard to get back.
Sometimes flying under the radar, out of the eyes of the masses, is of benefit. Hive is doing that much to the disappointment of many people. However, if we step back, we can see how this is advantageous. In short, it allows us to shore up our defenses.
When there is a community of people who not only trust the system, but are also trustworthy themselves, that is a huge step forward. We know that decentralization and distribution brings with it a certain amount of trust. Hive seems to be working in this direction.
Nevertheless, that does not mean all is done. Continued action must be taken to keep pushing the different levels of security forward. It is these integrations that help to maintain trust.
Creating a system that has levels of trustworthiness is of great help. However, as we see, there is no way to code that completely. Therefore, at some point, it comes down to people. There is a certain human element to it that has to be fostered. Many achieve this with a cult of personality ala Elon Musk or Jeff Bezos. People trust the company because they believe in their ability to produce.
Hive does not have that. While some of the crypto world does, we realize one slip up and it all can be lost. This is a point of vulnerability.
Incremental Steps
Hive's progress is like growing the holdings in one's wallet. Each day is another opportunity to expand things a bit more. We look to daily growth, small in nature. This is what ends up leading to long-term success.
We all heard stories about lottery winners who were broke in 5 years. They did not experience incremental steps but, rather, a huge windfall. The challenge here is that they could not handle it.
Hive needs to ensure it can handle things. By moving incrementally, we are able to keep taking measures to continually defend the chain. All projects should do this. Unfortunately, points of vulnerability can come up at any time.
One thing we do see on Hive is the steps taken to do one important thing: buy time. Often, when the wheels start coming off, everything appears to accelerate. This is certainly true with markets. On Hive, we see some measures designed to slow things down a bit. This will allow the Witnesses to step in and make some decisions. It is hard to do when the world is on fire.
Slow growth can be frustrating. Nevertheless, unlike the lottery winner, as our holdings grow, we are better able to handle that. There was a time in my life where losing $10K in a day would overwhelmed me. Now, that is an average market pullback. It is a good bet that many are experiencing something similar as their ability to manage their holdings expands.
The same applies to the entire ecosystem. Can we handle what is thrown at us? Are we getting stronger over time?
Take the attack from Justin Sun. If that happened today, we are much better prepared for it. Obviously, the ninja-mine is no longer a threat. We also implemented the 30 day power up window before governance goes into effect. However, there is a third consideration: the members of the community have more resources than they did a few years ago. Thus, collectively, we likely could mount a better defense.
That did not happen overnight. It also allows us to trust what is being developed because there are a bunch of people we know are all in with this. We are not alone. Many people are fully committed to what is being created.
All of this plays into resiliency. As we expand in this fashion, we are able to implement the pieces that enables the ecosystem to weather attacks. LUNA certain has the bullseye for the moment. That said, it will be on someone else down the road.
The question is whether Hive will be able to stand up to it when it is on us. That is something we have to keep preparing for.
And that is what provides trust. Going through these experiences and coming out the other side only makes us stronger.
Give us your thoughts. How much trust do you have with this ecosystem and what are some things we can do to enhance it?
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