Ethereum As A Risk-Free Asset Class? How About SpkNetwork?

This is an idea circulating of late about Ethereum. Could this replace US Treasuries as a risk-free asset class and become the de facto pricing mechanism for all other risk?

It is an interesting proposition worth looking at. Also, could we see this duplicated elsewhere like with what Hive is working on?

We are also seeing an idea that is very different from Bitcoin and the Store-of-Value proposition.

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U.S Treasuries

Why are U.S. Treasuries considered a risk-free asset?

There are two main reasons:

• The US Government has never defaulted on any of its securities.

• Treasuries are effectively backed by the largest and most stable economy in the world.

The first is a big boost in confidence. That is one of the reasons why the rate on the 10 Year US Bond is considered the benchmark. Going back a couple hundred years, there was never a default on the bond.

Of course, this won't be much of an issue likely with Ethereum since it is blockchain based and the 3rd party counter-risk can be eliminated.

It is the second reason that makes things interesting and would lead people to believe that Ethereum could operate in a similar manner.

United States Treasuries provide a guaranteed return. Since there never was a default, every bond was paid at expiration. Also, unlike stocks, the return of bonds is known at the point of purchase when held to redemption. Thus it is a fixed return.

Treasuries are back by the government's ability to tax. Since this is raised through the economic productivity of the nation, a bond is effectively giving on a claim to a portion of the output. This is why US bonds are stronger and more secure than those of areas such as the EU or Japan. It is the faith in the economy, not the government, that provides investors with the confidence.

The Case For Ethereum

With Ethereum some are seeing the same potential. They believe that this can end up being the most active blockchain once the conversion to PoS is completed.

Since there are transaction fees, the system becomes a self-sustaining one. This leads to the idea of Ethereum entering the risk-free asset class.

The concept is rather simple to follow.

Ethereum keeps growing in stature. More development takes place leading it to become the center of the new economic system. With this, more applications and use cases will keep showing up, expanding the capabilities of the network. Since it is looked at as the "World's Computer", all will gravitate towards it.

Here we see where the Ethereum economy would be at the top level. The fees from such a system would keep increasing. Since it would be ever growing, fee generation could be nearly guaranteed. Each year, the fees collected will outpace the previous one. Like the United States, so the thinking goes, Ethereum will have the largest blockchain economy. This means it will be premium above all else.

There is validity to this idea if it did, indeed, unfold this way. However, this is a big presumption since it is difficult to see most of the activity happening on just one chain.

The Case For SpkNetwork

What is being proposed is basically the fact that the circular nature of the network would end up with an ever growing economy that is dependable and can be collateralized.

So can we make the claim elsewhere?

Let us take a look at the SpkNetwork that is being developed by the team behind @threespeak. Interestingly this project is looking to do the same thing as Ethereum with an addition layer.

For the moment, upon release, the SpkNetwork will be backed by video creation. That is what the initial focus will be. People who create this will be posting on that network.

Since we know video is a popular arena these days, it will make sense that it will only grow over the next few years. Ultimately, it will be replaced by something like Virtual Reality but that is down the road.

The road map includes the expansion from there. DeFi, NFTs, and image hosting are just a few of the features that will be added. All of this is targeted at bringing users to a truly decentralized network where communities control and host the content.

Everything that is utilized on there is going to require transaction fees. This is paid for with BROCA. That is part of the Service Infrastructure Pool (SIP).

Just like the mindset with Ethereum, the thinking is the more popular the network becomes, the higher the fee generation will be. It is a consistently growing stream of revenue as long as growth is present.

There is one major difference: SIP.

The SIP is designed where all monies that enter from advertising or the selling of the miners (LARYNX). Hence, not only is there a consistent stream of revenues from fees that can be collateralized, there is actual collateral.

We need to ponder that for a second. Since what is in the SIP is not staked but, rather, locked up, we are dealing with an asset that has market value. This can be an additional layer of collateral as opposed to relying solely on the fee generation. Essentially, "bonds" could be rolled out against both, providing a risk-free asset for people to purchase.

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Of course, here is where the issue comes in. It is preposterous to think of SpkNetwork in that manner since it is not even built. However, it can also be stated that it is unlikely that Ethereum will reach this point either. The reason is that SpkNetwork will exist. So will Cardano as well as a host of other networks.

The idea of a single player, winner-take-all is not likely to be carried forward. This is still commonplace in the cryptocurrency world because people are still conditioned to believe in limitation. The digital realm is based upon abundance. Therefore, just looking at one risk-free asset is not how things will likely unfold.

We are going to see many of these scenarios created. Our economies will be based upon networks. Ultimately, there is going to be a bandwidth limitation on individual blockchains. Yet, in totality, there will be continued expansion in what is created. This will collectively keep things pushing the near-limitless level.

The point is we are seeing an entirely new asset class being developed that is going to replace what the present system is offering. The Network Effect has the ability to provide the collateral to fund a new financial structure.

All of this is happening right before our eyes.

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