The biggest problem of cryptocurrency according to Vitalik Buterin

The biggest problem of cryptocurrency according to Vitalik Buterin

Cryptocurrency is replete with problems, we know that, otherwise Bitcoin would be adopted a few years ago. Well, many of these problems can and will be solved.

By issues we mean a hacker attack, security vulnerability, volatility and so on. Acne Buterin found another serious problem, which is described in the white paper, written in collaboration with Zoe Hitzig, a PhD in Economics from Harvard and Glen Weyl, researchers from Microsoft Corporation.

The problem of passive beneficiaries

Passive beneficiary — the person or entity benefiting from the actions of others to meet common interests, without making its contribution to these actions. We are talking about those who appropriates public goods, which leads to their shortage for projects that they vitally need.

According to Buterin and Hitzig, this problem has spawned the development of many cryptocurrency projects, mainly those dealing with ICO.

White paper entitled “Liberal radicalism: the formal rules of a neutral society” illuminates the solution to this problem, which works similar to the “quadratic voting,” called liberal radicalism.

“Quadratic voting allows participants to vote using cryptographic tokens depending on how much they care about the problem. Liberal radicalism (LR) adheres to the same concept as the community contributing to public goods, such as software development, cryptocurrencies and journalism. And it works, increasing the project funding gradually depending on the number of participants and extent of their interest”.

While passive beneficiaries “take bread” from various worthy cryptocurrency projects, liberal radicalism seeks to solve this problem, creating a format that allows to gradually increase the funding.

Hitzig referred to liberal radicalism as effective solution:

“We offer a localized solution, real problems, and then demonstrate how these suggestions fit into a coherent political philosophy that addresses the important aspects of the crisis of modern liberalism. This tension often manifests itself in the dissatisfaction with the existing liberal-democratic systems and the emergence of authoritarian populist alternatives on both the left and right”.

An exciting mix of cryptography, Economics and politics. Buterin and Hitzig propose a theoretical concept that can help eliminate the problem of passive beneficiaries, which currently cripples the various cryptocurrency and blockchain projects. Of course, the liberal radicalism is not fully tested and proven solution:

“It has not been fully tested in field conditions and could be vulnerable to unexpected attacks or economic fads. Second, the mechanism relies heavily on the identification system, which means that at the moment he cannot coexist with anonymity, which is very important for many people in the space. In addition, to avoid attacks on the voting results, LR may require people to use reliable equipment.”

It seems that the solution to the problem, which we didn’t even earlier is found.

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