Why Do We Need a Borderless Economy?

A piece on a Borderless Economy using Algorand

A borderless economy will offer billions of unbanked people access to the financial system.

Yet I think there is another good reason why we need a borderless economy and that is to give ordinary people a way to save their own financial assets from bad government decisions. To make this point clear let me first describe how it is to live in a country with bad monetary policy.

I am a 41 years old Economist from Argentina and in the last 30 years I have lived one hyperinflation (where prices would go up by 10% on a daily basis), the “Corralito” and the “Corralon” (where people couldn’t withdraw their own savings from bank accounts), a huge devaluation that made the Peso lose 75% of its value in US Dollar terms and finally the “cepo” (where people couldn’t buy foreign currency)*.

A truly borderless economy would give honest ordinary people such as my countrymen a way to protect their assets from bad government policies. For instance, populist governments tend to have irresponsible fiscal spending that is financed by the Central Bank (the Fed), which causes inflation, and erodes people’s savings in the local currency, affecting especially those with lower incomes (because they tend to have a bigger share of their savings in local currency cash).

When I first met Bitcoin I instantly fell in love with the idea, as you may imagine. It sounded like the perfect solution for countries such as mine.

But then the first excitement passed, and I started to understand its limitations. Bitcoin is slow, it tends to be centralized (few mining pools control its validation process) and it consumes lots and lots of energy. This last point poses a threat, not only because of its high monetary costs but also because of its detrimentally harmful impact on the environment. According to the Cambridge Bitcoin Electricity Consumption Index, the estimated annualized consumption of Bitcoin is around 58.73 TWh. That’s more or less the same consumption of Chile!!

So I started to do some research on the different platforms out there, but they all have some issue that prevents them from being the solution the borderless economy needed to become a reality.

Until I met Algorand — very clever solution proposed by Turing award winner Silvio Micali, based on a Pure proof of Stake protocol that randomly selects the proposer of the block and again randomly selects 1000 participants who validate transactions proposed in that block. The chances of being selected are proportional to the stake of Algos each participant has, making bad behavior a bad idea.

This results in a fast, scalable, non-forking, permissionless, secure and eco-friendly blockchain. I’m convinced this is the approach that will eventually prevail.

The major challenge for Algorand, in my opinion, is networking. In order to get recognition I would suggest two things; 1) change the name of its coin from Algo to something more marketing-friendly that represents its strengths such as “Ecocoin” or “Smartcoin” (you know, “algo” means “something” in Spanish), and 2) There is a need for more informational content that explains in simplified terms the supply and rewards policy. I hope to contribute to the transparency of this as an Ambassador.

As I mentioned before, I think Algorand could be the ultimate solution to the blockchain trilemma and become the base of the new borderless economy. If you are upset because you didn’t buy Bitcoin a few years ago, maybe you should buy your stake in Algorand now. I did!

* This last situation became so ridiculous that people would take a day off from work and travel to neighboring countries just to withdraw US dollars at local ATMs at the official exchange rate, I’m not kidding!! I have done that twice!! In fact, if you read The Age of Cryptocurrency by Paul Vigna, you will find a great description of how Michael Casey had a rough time trying to take his money out of the country. ​