First a personal confession of me: I don't believe in worldwide peace. I regard the human nature as so bad that there will be always conflicts and violence. How great of a battle those conflicts become depends on the power of the clashing parties.
If this power can be reduced the effects of militant conflicts might be as well minimized.
And surely, we live in the nuclear age. That means if Moscow, Beijing or Washington are provoked too much then everything will be destroyed anyway. What I want to talk about here are all those "smaller" (proxy) wars which nowadays turn our world into a slaughterhouse. But first of all here some economical-historical background:
Before the World War I all main currencies had a gold standard. That meant that all citizen could exchange their bank notes into gold at any time. Therefore, money had been paper like today but it was backed by the precious metal gold which since ancient times had been highly valued.
A devaluation of money through inflation as we know it today - which by the way has often destroyed big empires throughout the history (see the economic history of the Roman Empire) - was not possible back then. The necessity to be able to exchange the paper money into the corresponding amount of gold had prevented the devaluation of money by politicians.
Because of the high costs of World War I which could not be financed through a mere increase of taxes inflation had to help since inflation is initially unnoticed by the population. Therefore, most countries removed the gold standard. Since if one war participating country removes the gold standard all others must go the same step if they don't want to fall behind.
After the war, many countries reintroduced the gold standard. But this was leading to the world economic crisis due to the high war debts. Therefore, the gold standard has been abolished again to get the crisis under control by means of state interventions. Next up, World War II occurred and as all wars it didn't only destroy wealth but its undertaking was very costly, too.
After world war II the so-called Bretton-Woods-system was introduced which didn't introduce a gold standard for the population but provided a gold-dollar as anchor currency. This meant that all the other countries linked up their currencies to the US-dollar by holding dollar reserves which could be redeemed to gold in the US.
This granted the USA an advantage because they could buy in foreign countries with fixed exchange rates and without selling enough products of equivalent value. Also, the US could carry out expensive wars (see Vietnam war) and just paid with their dollar note printing press. The USA could basically go shopping without paying. This resulted in a factual devaluation of the US dollar and a loss of trust in the American currency.
And since there was an increasing amount of US dollars circulating those couldn't be backed by the US gold reserves at some point. In the year 1971, therefore, the US president Richard Nixon abandoned the gold standard completely and with that basically ended the Bretton-Woods-system. Summarily the USA just betrayed all dollar holding countries by not any longer redeeming their dollars into gold.
Subsequently there is an ongoing competition of inflation between the nations including all their wars and debt records. Many economic crises have followed and will follow. The ultimate collapse of the worthless paper money is still to come up.
Here crypto currencies get into the game. Most of them are not backed by gold and as the paper money only consist of hot air. Let's check out the example of bitcoin: Indeed, one must consume a lot of expensive electricity to generate (mine) bitcoins but the value of bitcoin is similarly constituted as the value of paper money: Many people must use it so that I can expect to get other products I like with my bitcoins.
I cannot eat gold and so I cannot eat bitcoin. But gold I can use as jewelry and as an industrial commodity while I cannot use bitcoin for that purpose. On the other hand bitcoin are - just like paper and book money (virtual money on my bank account) - very practical to use as means of payment. Yes, bitcoins are even more useful - but more later.
Let's just assume for a moment that bitcoins gain general acceptance and replace centrally controlled government currencies. We would have a situation like with the gold standard before world war I. The states could not finance wars for a long time without political backing of the population.
Because governments could not just inflate the currency. Yes, our situation would even be much better than before world war I. Since at those days politicians could just abolish the gold standard.
But bitcoins are not controlled centrally and once they are established as a world currency one cannot just easily get rid of them again. There is one exception: If you have no private key and politicians and banks lead people into a "fake" bitcoin account in a bank without having deposited real bitcoin. That shouldn't happen.
Politicians which are eager for war could not long keep up with their battles since their money would run out quickly. And if bitcoins would really be the world's currency no other war opponent could act differently. Something like a removal of the gold standard by one party like in World War I which led to a cascade of abandonments of the gold standard by many states cannot happen with bitcoin.
However, I have to emphasize again that this peacemaking aspect will be effective only as soon as one or many crypto currencies gain global acceptance. And I also have to make precise distinctions for clarity here: When I talk about crypto currencies I only mean decentralized and not inflatable digital currencies like for example bitcoin.
A worldwide, inflatable and centrally-governed digital currency would be the dream of any totalitarian ruler and the exact opposite of the proposed solution in this article. The recently propagated abolishment of cash is a first step onto this wrong path.
Just as the car revolutionized our transport and the internet our information access crypto currencies might turn the service sector upside down. For example, the banking of the future will finally become customer friendly.
When I was a small boy I already was wondering why text messages can be received instantly on someone else's phone but a bank transfer even inside of Germany would take several days in the worst case. And why do banks take service fees everywhere they can while they can create money out of nothing?
With crypto currencies, global money transactions work within seconds and cost almost or literally nothing. And with bitcoin I don't even need a bank any longer which allegedly store my money safely but I could theoretically keep the access to my bitcoins in my mind. If thieves don't get access to my thoughts they would then not have access to my bitcoins as well.
The technology behind crypto currencies can also be used to unforgeable reproduce other business cases. Besides money also contracts (so called smart contracts) can be reproduced. The much promising project of the crypto currency Ethereum is trying this. With help of Ethereum for example employers can define labor contracts or insurance providers can define damage events.
In case of their occurrence a predefined amount of money will be automatically transferred to the client. This not only saves a lot of administrating resources but also prevents possible legal disputes. Because the insurance company cannot arbitrarily withhold payment nor the client can request more benefits as automatically, publicly and unforgeable defined in the smart contracts.
As an entrepreneur I might bind my services to such smart contracts to gain the trust of my possible customers. Because my customers know that after I accepted a smart contracted and committed it to the so called blockchain I cannot bypass it anymore. Basically, all notarial documentations and all kinds of recordings could run on a worldwide acknowledged blockchain and it would save a lot of costs.
In my beginner's guide you will learn everything you need to know about cryptos!
We already see how bitcoin liberates people from oppression. In China for example one is only allowed to take a certain amount of money per year out of the country. That is why many Chinese people use bitcoins for free capital transfer. In India, recently large amounts of cash have been declared as invalid literally overnight. In India there are also strict regulations for exporting Indian currency.
Another good idea is the project namecoin which want to reproduces an alternative to the DNS (Domain Name System) which is decentralized saved on the blockchain - a crypto currency technology. The DNS is responsible for the forwarding of internet addresses like www.liberated.blog to the correct server.
If there was no DNS we all would have to remember the IP addresses for every website we want to visit. And since IP addresses sometimes change we would have to stay updated regarding our favorite pages. The web as we know it would not exist without the DNS.
Since the DNS has always been controlled by governments states can control the internet up to a certain degree and therefore censor it. The average internet user is completely helpless against this.
One often hears the objection that bitcoin due to its anonymity helps terrorists and criminals. You also recently hear this argument in the debate of abolishing cash. For me this argument sounds very boring. The actual reasons behind this is that they want to keep the even more criminal paper money system (fiat money) alive.
But this system recently pushes the interest rate under zero percent. This causes that no rational human being wants to keep his money in the bank if besides inflation now interest rates eat up the hard-earned wealth. Without any deposit of cash even a fractional reserve bank cannot survive. The whole system would collapse.
Please also check out my article about our monetary system for more information.
One problem that especially occurrs with the most successful but technologically oldest crypto currency bitcoin is that the blockchain expands a lot. On the blockchain everything rests. The blockchain has to be stored as decentral and redundant as possible so that the system works advantageously.
The blockchain of bitcoin which is still - regardless of all hype - a very small and unimportant phenomenon. But still it has already a beyond 240 gigabytes blockchain while writing this article (11/2019). That means if I want to start an independent bitcoin server I first must download 240 gigabytes of data just to start with. And one does not simply send 240 gigabytes per e-mail but you need some infrastructure.
This infrastructure can as it grows more easily be controlled by centralized authorities like the state. That leads up to the next problem. A possible totalitarian state or group of state might restrict the bitcoin experiment locally as it is already the case in many place in the world.
A third possible problem would be that point in time when the decryption of the encryption algorithms used in the bitcoin technology will be possible. After being publicized this technology would undermine any trust in bitcoin and could lead the economy to chaos depending on the spreading of bitcoin.
But the biggest problem for the implementation of the advantages of crypto currencies is still the fact that today almost nobody is taking part in this technology. And if that doesn't change soon lobby groups that have no interest in the revolutionary effects of crypto currencies will try to prevent this technology through prohibitions and legal disadvantages by governments.
Crypto currencies have a great potential. Maybe bitcoin might not be the final solution but a different (future) crypto currency. Bitcoin should not be underestimated either, as it continues to develop technically through various updates. The big power of the growing mining network makes it more safe than any other cryptocurrency or data in this world.
A global, decentralized, digital currency system would bring many advantages and would create a lot of wealth. But first of all, it would work as a division of powers and would reduce the abuse of power by our rulers. But the revolution will stay only a dream as long as the general public didn't switch to crypto currencies.
How about you? Do you want to invest in this revolution? What do you think about crypto currencies? Do you believe in their success? What chances and dangers do you anticipate? Please share your opinion with us and write in the comment section below!
Please log in again. The login page will open in a new tab. After logging in you can close it and return to this page.