The quest for a decentralized pension plan
Pension plans in industrialized countries have been under attack for decades. Not only are they challenging to sustain, but they rely on constant population growth as the current working generation is expected to fund the pension plan of the retired population. Industrialized countries often suffer from population attrition, which is offset through immigration. When countries suffer an economic downturn, the pressure to maintain pension plans makes balancing financial needs very challenging. For example, countries like Japan that have been reluctant to open immigration programs to outsiders as well as coping with a massive baby boom that is entering retirement. It is not impossible that in our generation we will see pension plans being dissolved. However, the method of choice seems to be heading toward using inflation as a way to devalue savings, such that it can be afforded by the younger generation. With the financial impact of the COVID-19 virus and the printing of large quantities of currency in the United States, one wonders just how poorly the Baby Boomers will live on their pension as money loses value.
The idea of a decentralized pension plan is interesting since it could be impervious to governmental actions, especially if it becomes a worldwide trend. Such a system would remove the requirement of a favorable immigration policy to offset the population decrease. However, how does one design such a system with continuous growth potential to prevent devaluation from inflation? The HODL Commodity experiment appears to be such an attempt.
HODL Commodity
The HODL Commodity uses clever tokenomic principles (economics theories and human behavior applied to digital currency and assets) such that the price of the commodity increases by US$0.0001 for every transaction. The token programmatically enforces that the price cannot go down, it can only remain the same (if no transaction occurs), or it goes up (if a transaction occurs). Under a set of assumptions that I will discuss in a bit, this ensures that the value of your savings will be protected against devaluation, at least when compared to the US Dollar without relying on a single country effort.
The critical assumption that needs to be maintained to ensure this is true is that the volume of selling has to be lower or equal to the volume of buying for a certain amount of time. This is equivalent to saying that if Bill Gates decided to liquidate all his Microsoft stock, it would nearly kill Microsoft as the stock would plunge in value. No sane person would do this. So it is my honest opinion that HODL Commodity owners with significant investment in HODL wouldn’t attempt this for short-term gain; not only would it destroy the project, it would only return a tiny fraction of the value that can be created in the long run. If the critical mass of owners treats this commodity as a long-term savings strategy, we can ensure the long-term viability for generations to come.
Uniting the World through its Wallet
When it comes to savings and pension plans, the key is diversification since we are playing a long game. In this case, the HODL Commodity can be another tool in the arsenal of diversification, including assets such as Bitcoin. It is certainly riskier than a traditional bank savings account, but the return might be proportional to the risk level. Such digital borderless assets can shield one’s savings from an economic downturn affecting specific regions of the world, given that it is supported by the world population at large. For example, if China wins the economic war against the US, and such digital assets are dispersed in all countries, including China and the US, then everyone that holds onto these assets will be shielded against the outcome of the war to a certain extent. As such, if individuals are shielded from the financial impacts of competition, it may be possible to experience a more united world in our lifetime.
After all, we all live on the same planet, and we are stronger together.
Only time will tell.
