Cointime

Download App
iOS & Android

Analyzing Hacash: The First PoW Flatcoin with the Advantages of Gold and Bitcoin

Validated Project

The intensification of inflation has led to a decline in the purchasing power of the US dollar, the dominant global credit currency. In fact, the inflation rate of the US reached a staggering 9.1% in 2022, the highest level since 1981.

In countries like Venezuela, Turkey, Lebanon, and others, their local currencies have lost their purchasing power to such an extent that their own citizens have abandoned their national currencies in favor of using currencies like the US dollar, gold, and Bitcoin, which are considered more reliable stores of value.

The root cause of this loss of purchasing power in fiat currencies lies in the exploitative nature of the modern financial system.

National institutions have the power to mint currency, and when faced with economic mismanagement, it is the people who hold that national currency who suffer the most. This can result in the purchasing power of the currency earned through individual labor vanishing overnight. This phenomenon is unfolding in every country that operates on a fiat currency system, albeit to varying degrees.

Modern finance's financial assistance to banks and large corporations and its injection of monetary liquidity fundamentally amount to a form of robbing the poor to enrich the wealthy. It socializes the costs and losses, making the general population bear the burden of the greed and recklessness of a select few.

We need to address these issues at their root to prevent or significantly reduce financial crises and economic collapses, thereby safeguarding the interests of financially vulnerable populations from being exploited and squeezed.

The Flaws of Bitcoin and the Emergence of Flatcoin

Since the global financial crisis of 2008, the emergence of Bitcoin seemed to offer a glimmer of hope in eliminating the exploitative nature of the modern financial system. 
Bitcoin, which initially had no purchasing power and faced skepticism from various countries, has now reached a market cap of over a trillion dollars, even becoming the legal tender of El Salvador, having gained concrete purchasing power. It is widely recognized around the world as "digital gold," a journey that took approximately 15 years.
Bitcoin's initial value stemmed from being the world's first cryptocurrency that simultaneously achieved decentralization and prevented double-spending.

As it developed further, it made more people realize the potential of a non-sovereign currency. Most importantly, Bitcoin's intrinsic value came from the energy-intensive process of Proof of Work (PoW) mining, effectively converting real-world energy into virtual assets.

This gave rise to a virtual currency with intrinsic value, and blockchain was used to prove its scarcity. This process resembles the production of gold and established a purchasing power mechanism similar to that of commodity money, reintroducing this concept to the world of currency.

However, the limitation of Bitcoin is that its total supply is fixed at 21 million, with a halving event every four years. It cannot adjust its supply based on market demand, which leads to insufficient stability in its purchasing power.

This makes it unsuitable as a widespread medium for daily payments, and it can only serve as a store of value.

Bitcoin OGs and economist Lawrence H. White compared the purchasing power stability of Bitcoin and gold. They pointed out that while both are tools to hedge against inflation, their supply mechanisms differ significantly.

Gold has relatively good purchasing power stability because its supply can adjust according to market demand. When demand increases, rising prices stimulate more gold mining, increasing the supply and stabilizing the price. The gold standard provides further evidence of this stability, as the price difference was only 1% when the United States re-adopted and later left it in 1879 and 1914, respectively.

In contrast, Bitcoin's supply increases in a predetermined and unresponsive manner. A price increase in BTC may encourage more mining activity, but it won't create more Bitcoin. This is a significant drawback when it comes to Bitcoin's adoption as a widespread medium of exchange, as its price tends to fluctuate more dramatically.

Coinbase CEO Brian Armstrong has also acknowledged that many people are hesitant to use BTC as an actual currency and proposed the concept of "Flatcoin." Flatcoin was initially suggested by former Coinbase CTO Balaji Srinivasan as a cryptocurrency that's resistant to inflation, not pegged to fiat currency, and maintains purchasing power stability.

However, most current Flatcoins are pegged to various indexes for adjustment. These tokens do not rely on PoW and lack the intrinsic value of Bitcoin and gold, making them resemble decentralized paper currencies. Their adjustment mechanisms are singular and cannot address the centralization issues inherent in these indexes. They may also face significant challenges from tightening regulations by various countries.

The Emergence and Advantages of Hacash

In 2018, an anonymous individual or team published a whitepaper titled "Hacash: A Cryptocurrency System for Large-Scale Payments and Real-Time Settlement." This whitepaper introduced a cryptocurrency system that aimed to inherit the strengths of Bitcoin while implementing a purchasing power adjustment mechanism akin to gold. The system was designed to be fully decentralized.

The Hacash monetary system comprises three different types of currencies based on Proof-of-Work (PoW): HAC, HACD, and BTC.

BTC can be transferred unidirectionally into Hacash, maintaining its ownership and native value attributes, with the total supply remaining at 21 million and circulating in Hacash in the smallest Satoshi unit. BTC transfers result in the creation of HAC, and the issuance of HAC decreases progressively, reaching only 1 HAC for every 1 BTC transfer after 1.05 million BTC transfers.

HACD, with a total supply of approximately 16.77 million, is generated through mining and HAC bidding. Mining difficulty increases gradually, and can be produced on demand, with a maximum daily output of 58, so all HACD will theoretically take 800 years, but as the difficulty will rise exponentially in the following, to the point where it may never be possible to produce all the HACD.

In addition, HACD can be used for artistic creations at the same time, which is superior to BTC in terms of storing value. As of the time of this writing, 55% of HAC in circulation has been destroyed by HACD bidding.

HAC has an unlimited total supply primarily generated through mining. Additional HAC can be created through BTC one-way transfers and earning interest via the L2 payment network. HAC mining follows a Fibonacci-based emission schedule, starting with block 1 and increasing to 2, 3, 5, and 8 every year. After reaching 8, it will continue for a decade before further reducing to 5, 3, 2, and 1 every ten years, with each block producing 1 HAC.

On a macro level, HAC adjusts its supply through BTC transfers and competitive biddings for HACD to maintain stable purchasing power. As a result, HAC excels in payment settlements when compared to BTC, avoiding the centralization of stablecoins pegged to fiat money, and serving as a native cryptocurrency for large-scale settlement.

On a micro level, HAC can adjust its supply through on-chain collateral lending with HACD and BTC. These assets can be used to borrow HAC, increasing supply. Conversely, HACD and BTC can be used to redeem HAC and destroy it, reducing supply.

The process of purchasing power adjustment in HAC mirrors the mechanism used for gold but has a theoretically faster response time. As the price of HAC increases, it stimulates BTC transfers, HAC issuance, and supply increase through HACD and BTC collateral lending. When HAC's price decreases, it can be used to competitively destroy HACD through auctions and redeem HACD and BTC to reduce supply.

Why is Hacash A Better Money? 

Another thing that has to be considered is that gold has gone through millennia of development, so the same a currency that can actually assume the next mainstream of humanity must be considered accordingly.

In order to make it easier to understand, let's assume that both BTC and HAC have even surpassed the marketcap of gold by assuming that they have become the mainstream global settlement currencies, so how will they adjust their production to adapt to the progress and development of the human society in the future?

HAC's final block reward is 1 HAC, and all 21 million BTC have completed one-way transfers. HACD's difficulty surpasses the capacity of a nuclear power plant, and HAC's payment network interest rate is 1% annually, which results in an average annual growth rate of 2%, aligning with the global average GDP growth rate.

At that point in time HAC supply adjustment will rely heavily on HACD and BTC collateralized lending.

In contrast, Bitcoin's production cap is set at 21 million, and by 2140, all BTC will have been mined, making it unsustainable for long-term use in a dynamically evolving society.
In addition to Hacash being superior to gold and bitcoin in terms of currency elasticity and sustainability, we can evaluate Hacash against fiat, gold, and bitcoin in terms of 15 other monetary attributes, with a focus on explaining the other 5 attributes where HAC is superior:

  1. Divisibility. Bitcoin is one part in a billion, while Hacash is close to infinite.
  2. Fairness. Gold is unequal in terms of its global origins, but its total volume is not measurable, bitcoin is a fixed total volume, and its output is halved. Bitcoin is a fixed total, halving the output, while Hacash is an infinite output, increasing and then decreasing in a more equitable manner.
  3. Privacy. Gold can be dissolved and re-minted, Bitcoin does not have a native privacy technology, and Hacash comes with a native optional privacy scheme.
  4. Decentralization. Bitcoin and Hacash can be used to run a full node operation.
  5. Efficient. The payment of gold is impeded by the physical nature of Bitcoin and Hacash. Hacash can be used for peer-to-peer payments, but Hacash's payment system is a part of the monetary system.

Challenges Faced by Hacash

From an objective perspective, many aspects of Hacash's currency attributes are superior to gold and Bitcoin. However, due to the widespread use of fiat currencies, especially in countries where inflation rates remain low and the purchasing power of their national currencies remains strong, people do not prioritize Bitcoin, and even gold, to the same extent as those whose national currencies have completely lost their purchasing power.

The process of forming the purchasing power of Hacash, Bitcoin, and gold is the same. They all require global adoption and understanding as viable stores of value and mediums of exchange. This process leads to the establishment of a genuinely sovereign currency system.

It's evident that Hacash, as a currency, faces challenges not only from the distortions of fiat currencies but also from resistance by Bitcoin community. From a historical perspective on currency, high-quality currencies ultimately gain acceptance through people's choices.

And the length of the process of adoption of the best currency of the moment, Hacash, will depend on all the people of the world, it may be long, it may grow rapidly as soon as it meets an explosive opportunity, but in any case Hacash has shown us a viable monetary solution that can break away from the modern system of financial exploitation.

Comments

All Comments

Recommended for you

  • Hong Kong Financial Secretary: The Hong Kong government is promoting the development of virtual assets and is working with the Hong Kong Stock Exchange to strengthen its ties with the mainland through

    Hong Kong Financial Secretary's Deputy Secretary Huang Weilun stated that in recent years, the Hong Kong government has focused on promoting innovation in the financial industry, including promoting the development of virtual assets and financial technology. Therefore, they are cooperating with the Hong Kong Stock Exchange to enhance their connection with the mainland through the mutual market access scheme, achieving a win-win cooperation relationship in investment product scope and opportunities.

  • Nomura Securities Subsidiary Laser Digital Plans to Issue Japanese Stablecoin

    Nomura Securities announced its cooperation with its digital asset subsidiary, Laser Digital, and the parent company of stablecoin issuer GMO-Z, GMO Internet. The two parties plan to jointly explore the issuance of US dollar and Japanese yen stablecoins in Japan, and provide stablecoin-as-a-service solutions in the Japanese market. It is reported that GMO-Z has a New York State (NYDFS) trust license, and its stablecoins GYEN and ZUSD can be used on Ethereum, Solana, and Stellar blockchains.

  • South Korean media: The Ministry of Justice will crack down on market manipulation and fraud in the virtual asset market

    According to Korean media Digital Asset, the Korean Ministry of Justice stated that "the virtual asset crime joint investigation team of the Seoul Southern District Prosecutor's Office is working hard to crack down on market manipulation of virtual assets, unreported virtual asset exchanges, and virtual asset deposit fraud." The Ministry of Justice selected the PICA fraud case of 90 billion Korean won, illegal exchange business of 5800 Korean won, and the Haru Invest deposit fraud case of 1.4 trillion Korean won as representative examples of the three crimes.

  • Argentina Securities Commission in Talks with Salvadoran Authorities on Bitcoin Adoption

    According to reports, a high-ranking official from the Argentine National Securities Commission (CNV) met with the head of the Salvadoran National Digital Asset Commission (CNAD) last week to discuss the issue of adopting Bitcoin.

  • Argentine Regulators in Talks with El Salvador Authorities on Bitcoin Adoption

    The regulatory authorities of Argentina and Salvador held talks on the issue of adopting Bitcoin. A senior official from the Argentine National Securities Commission (CNV) met with the head of the Salvadoran National Digital Asset Commission (CNAD) last week. The two sides discussed cooperation agreements related to digital assets, and Argentine officials hope to learn from Salvador's experience in making Bitcoin a legal currency and plan to sign a cooperation agreement.It is reported that the purpose of this dialogue is to strengthen cooperation between the two countries in the regulation of Bitcoin and encrypted assets, and to promote the development of Argentina in this field.

  • Ethereum L2 TVL jumps to $46.5 billion, a new all-time high

    According to L2BEAT data, the current Ethereum Layer2 TVL has reached a historical high of 46.533 billion US dollars, with a 7-day increase of 17.16%. The top five TVLs are:Arbitrum One TVL is 19.25 billion US dollars, with a 7-day increase of 18.55%;

  • Elon Musk's AI company xAI completes $6 billion Series B financing, with participation from a16z and others

    Elon Musk's AI company xAI has announced the completion of a $6 billion B-round financing, with participation from Valor Equity Partners, Vy Capital, Andreessen Horowitz (a16z), Sequoia Capital, Fidelity Management & Research Company, Prince Alwaleed Bin Talal, Kingdom Holding, and others. This round of financing will be used to bring xAI's first batch of products to market, build advanced infrastructure, and accelerate future technology research and development.

  • Brazil CBDC pilot delayed to 2025 due to inefficient privacy solutions

    The Brazilian central bank recently stated that due to the inefficiency of the privacy solution provided by drex for the CBDC project, its pilot has been postponed until 2025. The new pilot phase will begin in July and end in 2025, allowing third parties to implement new features including smart contracts.

  • Uniswap generated over $2.8 million in fees in the past 24 hours

    On May 28th, according to CryptoFees data, Uniswap generated over $2.8 million in transaction fees in the past 24 hours, with an average daily transaction fee of about $3.74 million in the past 7 days.

  • What is AOVM?

    AOVM is an #AILayerProtocol built on @aoTheComputer, combining AO's hyper parallel with AI large models.