The history of fiat currencies, common money used and imposed by the state, has an intimate connection with economic crises and loss of purchasing power. The nature of the relationships that support money today are not economic, they are political. The decision to issue monetary units has nothing to do with monetary supply and demand, but rather with the political purpose for which the agent holding the issue has it. Therefore, the death of fiat money will be the result of a very dangerous disease: centralization. In the past, when the addition of monetary units in the economy was not exclusive to the state, but to gold miners, they were guided in the supply of gold by the current purchasing power: if purchasing power increased, this indicates more viability for gold mining and profitability; if purchasing power fell, it indicates less gold mining viability and profitability. However, this “thermometer” that indicates how necessary it is to issue currency does not exist in a situation where: a) there is only one issuer and; b) that issuer is not under the profit and loss conditions of its economic decisions. Therefore, what remains for the consumer is to use a hedge to escape the ongoing devaluation of the state and its currency. This could be done with goods, real estate, gold and so on. What was not expected was the emergence of Bitcoin, which allows this hedge to be done more easily and which, this technology, would open doors for other technologies. This also allowed the consumer to choose new hedging options and have the facility to choose other fiat currencies that are “less worse” such as, for example, keeping their reserves in Dollar Tether. This hedge would allow people to avoid losing the purchasing power of their currency, but unfortunately, some states may band together to further unify the currency. In the case of South America, we are talking about Peso Real. The biggest problem with this is that the currency has its economic incentives based on production that will affect purchasing power, given the preferences of individuals. Therefore, a unification of countries in terms of currency would create a general monetary policy for regions with extremely different productions, which could generate severe mismatches. Prevented from hedging with “less worse” fiduciary currencies, it remains to do with economic goods that follow the light of economic relations. But this too can be obstructed by the state. We take the CBDC as an example, which ended up centralizing financial relationships, controlling sensitive data and making it difficult for economic agents to buy cryptocurrency. Another big problem with CBDC’s is the thermometer for issuing the currency. See that, compared to mining companies, the state has less ability to identify the feasibility of issuing the currency without harming purchasing power. However, the cost of printing money is still a certain “brake” and the possibility of a bank run is a “sign” that the economy is extremely out of order: without these two issues that cease to exist with purely digital money, the “ brake” ceases to exist, given the negligible cost of issuing money and the “signal” of the economy ceases to exist, making economic crises more catastrophic than they already are. Despite being a negative situation, we highlight the importance of the return of the monetary system to economic relations, with the possibility of having profits and losses and, thus, maintaining or not a financial institution. After many years, a specific technology was able to perfectly simulate the monetary emission ratios that miners had, which are healthy monetary emission ratios: Bitcoin. This and much more can be found in the Decentralized Debate episode
Warning: The text presented in this column does not necessarily reflect the opinion of CriptoFácil. Also Read: Mango Market Hacker Loses Millions While Trying To Attack Aave Read Also: Stablecoins Show Signs Of Stabilizing After FTX Collapse Read Also: Cybercriminals Should Abandon Bitcoin As Tracking Improves, Says Kaspersky
The new Dinheiro, Peso-Real, Digital Dollar, CBDC and Bitcoin
