In all the years that had gone by, I never envisioned that I would one day go back to my old secondary school (high school) notes and read up one or to things about economics.
I was searching through my old school notes at home when I stumbled upon a text book.
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very much like this, except older
Reading through,I found a topic that dealt with the issues of what attributes a material needs to attain in order to be qualified as money.
This got me thinking loud, and for good reason. This book was written before the creation of bitcoin and crypto currencies, and while a bit outdated, the information about money generally still holds true in the fiat world today.
Then if that is the case, a question should be asked.
Can steem be viable as a form of money, capable of replacing the currency of countries?
A country of steem
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Lets create an hypotetical situation where a country loke china or even a union like the European union were to replace their currency with steem, what would happen and how will the economy fair?
Well,first things first, we have to know certain attributes of money that has been established over the years.
Its scarcity
Its acceptability
Value of itself
stability
ease of carry
ability to exchange
Its scarcity
The value of money has always been governed by how much of the currency is ever in suppy. The first step to sing a currency is knowing that it isnt infinte. A currency that can be printed continously and forever cannot be used for transactions, as sooner or later, everyone is going to have a share of the currencyand the value plummets.
This attribute is what makes it impossible for cheap materials such as stone, normal sea shells, and any other readily available material to be used for transactions.
Acceptability
Simply put, a currency cannot be considered a currency unless a group of people are willing to accept it, and use it to trade Once an item starts being used for trading and exchange of goods and services, then we can definitely say that its on its way to being a successful currency.
The item must be universally accepted by a large number of people who not just hold it, but are willing to exchange it between themselves.
Value of itself
When I say value of itself, I am referring to how much an item is worth, compared to another item of the same category.
Take gold, platinum, or any other naturally occurring precious stone for instance.
All are not created equal. Gold for instance has different weight, purity levels, even different compositions and impurities ranging from one stone to the next.
However, fiat does not have this problem, when switching from gold to fiat, this was one of the advantages fiat against stones.
And it is also an advantage that cryptos ave against fiat, as every other steem, is exactly 100% identical to another steem.
Stabilty
A currencies stability plays an important role in the fate it it. A currency needs to have a stable price most of the time, not fluctuating up and down. This seems to be a problem for cryptos, especially alt coins as their value is affected by not only market actions(market corrections, pump and dump etc) But also the price of bitcoin.
If we run China with steem and bitcoin flops, who is to say steem will survive the market disturbance?
Ease of carry
A currency needs to be easy to carry around. It should be able to fit within your pocket, out of reach of bandits, and small enough that a substantial amount can be carried around.
Again here, cryptocurrency shines through. In terms of ability to carry around, electronic money is the easiest, essentially allowing you to carry infinite amount of money on anything from your phone, to your USB, to even a microchip embedded in anything you wish it to be embedded into.
Ability to exchange
Finally , we reach the last important attribute of any currency. The ability to exchange it for goods, services, and charity, if need be.
This is also tied in with the ease of use, as a currency that isnt easy to move can be quite daunting.
A currency needs to have the ability to be sent from one user to another really quickly, efficiently, and in such a way that evidence of the transaction can be printed.
With the introduction of blockchain technology, this doesn't seem to be a problem.
So can steem be the currency of China?
Now first off I mentioned china arbitrarily. Next, I do not see the reason why steem cannot replace the currencies of the world. Take it that I am no expert on economics, and therefore I can only speculate using the little I know, but apart from the fact that steem will definitely be printed to infinity, I feel as though steem, and indeed all cryptos have inherent advantages over fiat currency.
Banks in their most basic forms are businesses that store your money from you, and use your money to run other businesses and transactions, and as a result, you get a certain percent interest every year, and your money is safe in the long ru.
The idea of a bank works because a lot of people are putting their money into it, and your money essentially become 1's and 0'sin a computer system. The physical cash you dropped in the bank would be long gone, only your account remains, and an estimate of your worth there. Were the bank to close the next day, Your money would be locked away from you, meaning you have to go through a really tough process to get it back.
But what if we can change that?
Cryptos essentially put banks at the middle, and turn them into middle men in a relationship between a man and his money.
Cryptos and blcokchain technology makes it possible to send money directly to someone, without the need of a bank and without trust, because it is written and signed off in the blockchain.
Your wallets are encrypted with passwords that would takes eons to hack and you have direct access to your money.
It works because everyone is in on it. Essentially everyone becomes the bank and the bank becomes a mindset rather than an institution.
This, is what is possible with cryptos, and this is why cryptos can replace currencies of countries,
Thanks.