I don’t like cryptos, at least not as they are used today for rampant speculation, tax evasion and criminal activities. But, I can think of one out-of-the-box idea: use a crypto, say Bitcoin, as an anchor for fiat currencies, very much like the way gold was used some 100 years ago.
In this scheme, central banks would own Bitcoin as an asset and issue fiat currency (dollars, euros, yen, etc) only up to the limit of a set multiple of their Bitcoin holdings. Since Bitcoin is now very difficult and expensive to mine, the amount of dollars would only rise very slowly.
It would be like going back to the gold standard, but using a digital-era “precious metal”. In one fell swoop, credit growth and monetary inflation would go down very significantly.
This would also put an end to the Permagrowth economy, as well as the finance-is-everything notion. But, it would keep the existing banking/markets system functioning more or less as today, albeit shrinking its oversized dominance in the global economy. The tail would stop wagging the dog, but it would still wag.
Comments?
well, if you want gold, why not use gold? =)
ReplyDeleteGold has several drawbacks: it’s mining is limited by geography/geology, it is ecologically horrible to produce, it is very expensive to store and move and it can’t really easily be used as money for transactions. Plus, it has other, legitimate uses as jewelry and as an industrial metal.
Deletewell, let me take the opposite argument to keep the conversation going.
DeleteWe could store gold somewhere and trade banknotes (which is the suggestion)... ecologically, gold would be better as it is mostly already mined and it does not incur much more ecological damage when used in transactions...
I would say gold actually having some use would be a plus, rather than a minus?
Actually, the whole discussion about any currency standard is entirely theoretical since no government will do it under the current Grow At All Costs economic/social system. But it’s fun to speculate on a legitimate use for cryptos 😜😜
DeleteI would say that the great vulnerability of cypto is its need for online verification (unlike gold).... it means that it can potentially be traced, making it vulnerable to govt control... not good for a currency designed to evade government control.
DeleteWhat crypto would be really good for, is for the govt to control the monetary system.. digital yuan? One can remove all of a person's wealth with a click of a button.
Bitcoins' ecological footprint is horrible too Hells.
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