The journey of bitcoin to replace the US currency teaches many lessons, and this is the third in a series. You can read the first post in the series on how to get rid of the gold standard here. The second, on removing fiat architecture, is here.
The second part of this series discussed using the Open Systems Interconnection paradigm to understand the fiat system. We discussed why and how people stopped following sound money rules in the first half. Here, we shall discuss a new system supported by Bitcoin (BTC). Then we’ll discuss why we stopped applying sound money ideas and how Bitcoin makes it more advantageous for everyone.
The Open Systems Interconnection model has seven levels, which were all discussed previously. This model didn’t win the network war. TCP/IP was a foundation upon which the current internet was built, and it was only one of several elements that had a role. It was more decentralized than the original. One was a layer decrease.
We’ll approach Bitcoin from the perspective of the architectureDATA LIONK that gave rise to the internet. Open Systems Interconnection is a helpful approach to think about architecture, but not every application needs every layer. This is done by using a system identical to the last one in the series. However, using Bitcoin instead of dollars and only four layers for TCP/IP. Let us first analyze the seven tiers of the fiat system.
Bitcoin Fiat Layers
The Physical Layer is the first layer, which used to be gold when we had sound money. The Data Link is the second layer, which connects two nodes. Two central banks, for example, might connect via the Society for Worldwide Interbank Financial Telecommunications, as outlined in section two.
The third option is Network. It is where we create the path to nodes. Individual addresses or banking system routing and account numbers. The fourth layer is Transportation, which enables for easy cash transportation. We likened this to credit in the fiat system. It allows for speedier processing on the promise of an I owe you. Sessions is the fifth tier.
Bidirectional token management is a simple term for it. This is the procedure for creating tokens that may be purchased and traded. The derivatives market is where it all happens.
The sixth category is Presentation, which describes how the network creates a user-friendly presentation. Consider the programming that powers your online banking platform’s user interface. The seventh and final layer is Application, which is where the consumer enters. All of these layers come together to form an app that the consumer uses to manage their money.
According to Network Administration, the Internet Protocol or Transmission Control Protocol Application, Transport, Internet. Additionally are the Network Access are the levels of the Transmission Control Protocol/Internet Protocol. They are comprised of the Application, Transport, Internet, and Network Access. In general, the layers of Bitcoin follow this structure, albeit in a somewhat different order than in the previous arrangement.
The upshot is that Bitcoin not only has the capacity to replace the current fiat currency system. But, it also has the infrastructure in place to do so far more efficiently than the current system does. Neither is this a process of dethroning the United States Dollar as the world’s reserve currency. In contrast, it is a process of completely eliminating fiat money.
Rather, the Bitcoin system must work in conjunction with the existing currency system. Also, consumers must decide whether or not to use it as a payment method. The other system will be underutilized once adoption and education have reached a critical mass of participants.
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