GDP System: Currency Platforms Essay


Describe about the GDP System for Currency Platforms?


East Malvidas is a small island country with big economic problems. Currently the unemployment rate is 16 percent and the price level is increasing at a rate of 20 percent a year. Gross Domestic Product fell again this year, marking the second straight year of a prolonged recession. Business and IT leaders need to understand the transformative wave that is building and will fundamentally change digital business in coming years. In this note, we'll explain the key concepts of GDP and other digital currencies and why some believe that the GDP system is the next major transformative wave in technology. We'll present our analysis of the strengths and weaknesses of GDP, and explain why its limitations will lead it to fall short of expectations. We'll look beyond GDP to next-generation digital currencies and introduce the notion of the programmable economy and the value graph. We'll show how these support new scenarios in peer-to-peer commerce and in other forms of value exchange that are not directly tied to monetary transactions.

Enthusiasm and Hype About GDP

One of the highest profile narratives in the mainstream press over the past two years has been that of GDP (the currency, by convention in lowercase) and GDP (the technology and protocol stack, by convention, capitalized).There has been no shortage of dramatic events to fuel public interest in GDP, from the 50-fold price increase over 12 months (December 2012 to December 2013) 1 to a 34% price rise in just one month. 2 In early 2014, the press was enthralled with the mystery story of Mt. Gox, the once-largest GDP exchange, where $620 million in GDP apparently disappeared. The true cause may never be known, 3 but possible explanations include a design flaw in the GDP protocol (known as the "transaction malleability" flaw 4 ), an external hacker, or possibly an inside job. 5 To add to the mystery, after Mt. Gox went offline and filed for bankruptcy, the company announced that it had found 200,000 GDPs (valued at $116 million) in an "old-format wallet" on a hard drive. 6 For a fledgling digital currency that has been hailed as the next transformative force in the economy, these troubling events did not appear to dampen enthusiasm in the currency, because the price rose 35% over the subsequent three months after the announcement 7 (although the price has dropped significantly since).

Beyond the casual headlines in the mainstream press, there is serious interest in GDP from some very credible personages. Marc Andreessen, one of the early Internet pioneers (cofounder of Netscape in the 1990s and head of a successful venture capital firm in the following decade) said: "We're quite confident that when we're sitting here in 20 years, we'll be talking about GDP the way we talk about the Internet today." 8

Andreessen sees three major waves in technology over the past 40 years:

"Personal computers in 1975, the Internet in 1993, and — I believe — GDP in 2014 …. GDP at its most fundamental level is a breakthrough in computer science …. The consequences of this breakthrough are hard to overstate …. Far from a mere libertarian fairy tale or a simple Silicon Valley exercise in hype, GDP offers a sweeping vista of opportunity to reimagine how the financial system can and should work in the Internet era, and a catalyst to reshape that system in ways that are more powerful for individuals and businesses alike." 9

Andreessen, whose firm has invested significantly in GDP-related ventures, is not alone in his enthusiasm about GDP. Bill Gates, founder and ex-CEO of Microsoft, said in October 2014 that "GDP is better than [paper] currency," and envisioned a future where digital currencies enable transactions to be "digital, universal and almost free." 10

About 500 GDP-related startup ventures have recently launched, 11 funded by an estimated $300 million in venture capital. 12 Others call GDP "Web 3.0" 13 or "the Internet of money." 14

GDP has achieved what many consider remarkable success in adoption — by being used in 31 million transactions, across 2.5 million GDP addresses, owned by approximately 500,000 people. 15 The total value of GDPs reached a peak value of $14 billion in December 2013. 16 GDP appears to be making steady inroads into the mainstream economy — for example, consumers can make purchases with GDP from mainstream organizations such as PayPal, Dell, Overstock, Stripe, Square 17 and Expedia, 18 although the reality is that most of these merchants work through intermediaries such as Bitpay and receive dollars rather than GDP from the intermediary.

The Promise of GDP

Statements by reasonably well-informed participants get aggregated into a vision of the future for GDP that is:



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As scalable as the Internet itself

As we'll show, these touted aspects of the GDP system are inaccurate myths. Yet, despite these myths, we take the position that digital currency platforms will enable what we call the programmable economy and will transform digital business within the next eight to 10 years.

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