Why did Monteliberro create an internal financial system similar to fiat (with artificial tokens and a trusted third party), and why do you support this decision by involving people? If the Montenegrin authorities deem Monteliberro’s internal payment tokens as securities and shut the operation down, will you take on the responsibility of reimbursing people for their financial losses? After all, it is obvious that abandoning Bitcoin in favor of one’s own internal shitcoin is merely a way for the owner and members of his politburo to make money.
Vito
To understand the logic behind the emergence of EURMTL, let’s compare Montenegro, for example, with El Salvador.
Neither state has its own sovereignly issued national currency. In El Salvador, the legal means of payment are the US dollar and Bitcoin. In Montenegro, it is the euro. Formally, the circulation of other fiat, as well as cryptocurrencies, is not regulated in any way, but in practice, we see a complete absence of street exchange points (unlike neighboring Serbia, where exchange offices are on every corner) and a complete absence of crypto ATMs (there was only one in the entire country, and even that one was arrested by the state, because in the absence of regulations, one agency believed “what is not permitted is forbidden,” another “what is not forbidden is permitted,” and in reality, the crypto ATM owners simply lacked sufficiently strong protection).
In El Salvador, a business owner, for the most part, does not care whether a client pays in dollars or Bitcoin. The exchange spread in the BTC/USDT pair is negligible, and the exchange between USDT and dollar cash is also likely carried out with minimal commissions. Thus, an entrepreneur can easily transfer money from one form to another literally on the fly, based on their preference for which form is more convenient for storing value.
And what about Montenegro? An entrepreneur has the right to accept only euros, in cash or non-cash form. If, instead of euros, he accepts anything else, for example, Bitcoin, he must put the euro equivalent of the received values from his own stash into the cash register, otherwise, the state will issue him a massive fine. This means he needs tools for convenient conversion. The exchange spread in the BTC/EUR pair is slightly higher than in the pair with the dollar, but tolerable. However, there is no sufficiently liquid euro-pegged stablecoin in existence; everyone uses dollar stables. And in order to withdraw money from an exchange to a bank card, one needs to have a bank card and a bank that will not block such an operation. Thus, for our potential Bitcoin maximalist, it would be more reliable to find some kind of money changer who will buy his bitcoins for euro cash, and then the entrepreneur can use the acquired euro cash to put into his own cash register and tell the state: here, look, I sold my stuff for euros and am ready to report to you. The commission for such street exchange is about 5%, and the daily exchange rate of Bitcoin relative to the euro also fluctuates freely by about the same amount, so on an unlucky day, you can lose a lot of money.
Of course, when calculating things yesterday, there were no problems with telling each other prices in Bitcoin and settling with it. In fact, for large deals, we regularly do exactly that, because there aren’t many maniacs willing to hold large sums in fiat; Bitcoin is the savings tool. But imagine a gathering in a restaurant. Seven people walked around for three hours, racked up a bill of two hundred euros, and the owner wouldn’t even think about splitting the check because, by local customs, one person always pays. You could, of course, open calculators and start calculating: here this unfortunate owner of a two-hundred-euro note pays for everyone, the Bitcoin to Euro exchange rate is such-and-such, so now let him issue an invoice in Lightning to each drinking companion for the Bitcoin equivalent of the debt expressed in euros. Very damn convenient, especially when everyone is tipsy.
Therefore, we simply invented our own Euro stablecoin and started using it, primarily for these kinds of small mutual settlements. And so that the counterparty would willingly accept these tokens, some project participants took on a free social burden—the obligation to exchange EURMTL for EuroCash for anyone who wishes, without a commission. It is a heavy burden. I, for example, do not dare take on such obligations for any significant amount, because it would require freezing my own capital in EuroCash and EURMTL, and the mere prospect of having so much money sitting not in Bitcoin simply makes me sick.
I hope I have managed to make it clear that maintaining the EURMTL infrastructure is not a profit for the issuer, but an expense. For what purpose does it incur them? The issuer of mules is the Montelibero investment fund. Naturally, it would not build such an impressive and costly infrastructure for the free exchange of mules for cash and back just to provide the Montelibero community members with a tool for splitting a cafe bill. The main purpose of the infrastructure is to make it convenient for people to buy fund shares and receive dividends on them. Why not conduct all settlements in Bitcoin? Because the fund, by attracting investments, invests them into local businesses. A local business, having received investments in any currency, will be forced to convert them into euros to spend on its subsequent operating activities. It will also receive its profits in euros. Under these conditions, fixing a business’s debt obligations in Bitcoin means predetermining its future bankruptcy, as the long-term growth rate of Bitcoin’s exchange rate exceeds the income of almost any business.
Of course, the upcoming hyperbitcoinization will mean a transition to ubiquitous settlements in Bitcoin, but it will also mean a significant decrease in the growth rate of Bitcoin’s purchasing power; for now, during this transition period, it is necessary to conduct settlements and hold some reserves in currencies whose long-term value is decreasing.
Now let’s talk about the risks of direct intervention by the Montenegrin state in the Montelibero tokenomics by declaring any tokenized liabilities as securities, the circulation of which requires approval from the state financial regulator.
Yes, for some time the global trend was exactly this, and it was reflected in the fact that the US jurisdiction was becoming increasingly toxic for cryptocurrencies. What did this lead to? To the ruling party suffering a crushing defeat in all branches of government under the promises of its opponents to significantly deregulate the industry. I foresee a substantial reduction in the powers of the US Securities and Exchange Commission regarding cryptocurrencies, European regulators following suit in the same vein, and a complete loss of interest from the Montenegrin regulator in the relevant sphere, because it is no longer fashionable.
Let’s assume, however, that instead of following American trends, the EU and Montenegro fall, say, under China’s influence. They ban cryptocurrencies or subject them to a large number of regulations. It is clear that in this case, any crypto enthusiasts in Montenegro will feel just as nervous as, say, marijuana sellers. In other words, only a handful of people will be held accountable for this undoubtedly prohibited business, purely to demonstrate that the state is working hard in this direction. Naturally, in this case, Montelibero will have to move its entire infrastructure from the simple, convenient, cheap, but very transparent Stellar to some other blockchain. We have already had experience working with tokens on the Liquid sidechain. It was a terrible hassle, but better than nothing.
There will be no need for me to compensate Montelibero tokenomics participants for their financial losses; instead, I will have to participate in developing manuals for transitioning to systems with higher levels of privacy. I do not have the resources to do this in advance, but I consider such a scenario highly unlikely. Even if it were implemented, we would most likely just pause the tokenomics until a new solution is developed, and in the meantime, we will make do with Lightning payments.
To summarize.
- Montelibero tokenomics has evolved along an evolutionary path, following the real needs of the community more closely than the theoretical considerations of Bitcoin maximalists.
- Montelibero tokenomics will easily restructure either for settlements in Bitcoin under an optimistic hyperbitcoinization scenario, or for the use of secure mutual obligation accounting schemes under a pessimistic scenario of a sharp increase in state regulatory control.