What Is a Decentralized Currency?

Decentralized currency refers to bank-free methods of transferring wealth or ownership of any other commodity without needing a third party. The money we have traditionally used is centralized, controlled by a central authority. The third-party ownership has led to systemic issues as the currency value relies only on the centralized authority’s willingness to honor the obligation. Central banks, for example, can freely adjust the value to meet certain funding obligations which we’ve seen, through various financial crises, this is detrimental to people who lose control over the value of their own finances. 

Decentralized currencies, or peer-to-peer currencies, are primarily used in virtual markets, with a value represented by encrypted code that is easily verifiable, but impossible to reproduce. The value of decentralized currencies is determined by the demand of the coin without a central authority having influence over it. It cannot be changed by any actor. 

These currencies are also most often borderless; therefore, allowing for seamless and cheaper international payments, and are usually immune to inflation or deflation. The fast development of decentralized currencies is revolutionizing the way we transfer and quantify value and wealth. 

Author: Travis Moore, CTO of Frax 

Bio: Travis Moore is an angel investor, programmer, entrepreneur, and the CTO of Frax, the world’s first fractional algorithmic stablecoin that is partially backed by collateral and stabilized algorithmically. Frax is open-source and permissionless, bringing a truly trustless, scalable, and stable asset to the future of decentralized finance. Moore is also co-founder of the blockchain-based knowledge base, Everipedia. Moore has a triple-major from UCLA in Neuroscience, Biochemistry, and Molecular, Cell, & Developmental Biology. His passions are artificial intelligence and blockchain technology, which he believes are the two industries that will impact the world the most in the coming decade.