Anyone involved in cryptocurrency is likely aware of the shortcomings of fiat currency and the banking system in general. This is something that, once researched, really stands out.
Sadly, few take the time to engage upon this discovery.
Nevertheless, we are seeing some movements that could, ultimately, aid the transformation to cryptocurrency. With the economic crisis that was brought on by COVID-19, some are rethinking the idea of currency and how it can be altered.
Recently, a New York State Assemblyman put together a bill that proposed a state ledger. What this does is create a master account from which people would make a receive payments . This would allow for transfers not only between individuals but also state entities.
The theory behind this is there are billions of dollars in tax credits that go unused each year. These credits would effectively be put into circulation allowing residents to engage in commerce using "money" that is presently idle. Also, in keeping with the idea of cooperative money, this would be accepted by local entities yet would exclude the major chains such as Amazon.
Ultimately, the hope is to help stimulate local economies within the State of New York by injecting billions of dollars.
While this is a bill that still has to make it through the Assembly, a town in Washington has turned to wood.
The town of Tenino decided to try and stimulate their economy by printing a currency out of wood. This was backed by $10,000 and given out to lower income residents who could not afford the basics such as food.
When in doubt, print your own money.
This is an idea that was used in the 1930s during the Great Depression. The town of about 1,800 people is hoping it is a way to keep the local community alive during these rough times. Businesses in that town are locally owned and operate on tight margins. The ability to weather a complete lock down was not something that it could handle.
The program works like this:
Once they’re approved, they can pick up their stipends, printed in wooden notes worth $25 each. The city is capping the amount each resident can accrue at 12 wooden notes — or $300 — per month. According to Fournier, each note features a Latin inscription that means, basically, ‘We’ve got this handled.’
The spending comes with a few restrictions: Residents can’t use the money to buy cigarettes, lottery tickets, or alcohol. The currency is designed for the essentials, including food, gas, and daycare. Almost every business in town accepts the wooden notes, and twice a month, they can submit redemption requests to the city to turn the notes into cash.
The key is that, by printing the currency on wood, the money stays in the local economy. Obviously, these have no value outside the town. Thus, individuals are going to spend it locally, helping businesses. Since merchants can swap it into USD, they have the ability to pay their suppliers.
This particular project decided to back the currency with dollars. The one proposed by the New York Assemblyman is backed by unused tax credits. Bitcoin is backed by energy and computational power.
Ultimately, we are starting to see what currencies are back by. Even the United States Dollar is not backed by what people think. The notes say they are basically backed by the faith in the government. Who has faith in the United States Government when it comes to financial matters? Like all governments, it showed it is totally inept when it comes to financial affairs.
In reality, the United States Dollar is backed by the productivity of the population. Thus, the power of the U.S. economy is behind it. Here is why many, in times of economic uncertainty, rush into the USD and out of other currencies. The thought is no matter how bad the U.S. economy gets, it is still better than the rest. It is the "best house in a bad neighborhood" idea.
Cryptocurrency is the same way. Take a currency like HIVE. It is backed by the activities of a dedicated user base along with a group of developers who are consistently putting out more applications. The confidence that this will continue to grow over time is what helps the value of the token.
If we encounter an economic situation where a prolonged recession (or depression) is on tap, we could see a lot of experiments moving away from centralized currency. Local currencies will likely keep popping up in certain areas around the world. This might help to break people's belief that national currencies are all that have value. They will see first hand the ability to interact using different currencies in their local economies.
Delving into the online world simply brings us to the enormity of a system that is built around abundance. Entering the virtual world removes physical limitations of resources. Outside of computer power, there is little to hold back the innovation online. When it comes to money, the ability to create near unlimited money is before us. The only question is what activities will the currencies be backed by.
We were raised to believe that money is real. Those of us old enough to remember when most transactions were done in cash learned that money was tangible. As we progressed into the digital age, we now see that money is really nothing more than numbers on a screen. The numbers changes as money flows in and out, yet it is still numbers. The major difference is that we all agree upon what those numbers mean.
Thus, money is a social construct, subject to change as we, the social beings, see fit. This is where the evolution towards cryptocurrency is likely to come from. The fact that we humans start to embrace a different system of money and assign value to something else.
This is what the present system fears. Those behind the fiat construct know that money isn't real. They played this game for decades while the rest of us were killing ourselves in hopes of getting a few of the crumbs. We made it real and they were using Monopoly money.
As more cooperative currencies start to show up, we are likely to see this mindset shift. In the end, as we dive deeper into the digital world over the next decade, people will start to find the value of cryptocurrency (digital assets).
Ultimately, money is backed by our belief system. When that starts to change, the entire global economy will shift.
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Posted Using LeoFinance