Alternative currencies are the future: why it matters for development

June 13, 2020 by No Comments

When I started teaching in 2012, I decided to start my lecture with an analysis of how money affects the social order. What a student I find very interesting is the world’s then-nascent cryptocurrencies, which I described at length as an important feature in the future of money.

Some colleagues criticized my approach. They accused me indirectly encourages students to invest in what they see as the shade, under a full financial crime. But I just reveal a young mind to fast-growing, complex phenomenon which in my view will have a huge impact on the distribution of power in the global economy.

Behind most cryptocurrencies is a simple technology that is known as “blockchain”, a system that is in some computers that allow for peer-to-peer finance book record of all transactions that occur in the network.

This results in an open access registry monetary flows that create transparent intermediary banking authority is not necessary Hence challenge the conventional belief that money can only work through central planning.

As I explain in my book, Welfare Economy: Success in a World Without growth, the money system is undergoing unprecedented transition from a centralized to a decentralized network authority.

Conventional money is managed by the state and banks, with the user at the receiving end of monetary policy decisions. In contrast, most alternative currency peer-to-peer. That means they are managed by the users themselves and do not require intermediaries. Some of them have a global reach thanks to digital technology, while others are locally based.

Take Bitcoin, the currency of the peer-to-peer the most popular in the world, with a market capitalization of over 40 billion US dollars. Someone bought the equivalent of $ 1 in Bitcoin in 2009 now will have about $ 25 million. One Bitcoin is currently equivalent in value to two ounces of gold. other stars including Ethereum, litecoin and Ripple.

Taking the world by storm
Many of these currencies remained fairly stable in the short term. swings up and down they reached more than 10% of the value of each week. But the long-term trend is impressive. Countries for their heating.

In April 2017, Japan accept Bitcoin as a payment method that is valid for the retail market. After threatening the digital currency last year, the Russian government took a U-turn. President Vladimir Putin met with the developer and is committed to recognizing Ethereum cryptocurrencies in 2018.

Following initial freezing, the People’s Bank of China readmission withdrawal in Bitcoin in June 2017, throwing the currency to new heights. In the US, cryptocurrencies which is becoming increasingly accepted as a method of payment and store of value.

The Australian Government will soon make it easier for new digital currency business innovation to operate, freeing traders and investors from the goods and services tax.

It’s clear that cryptocurrencies will soon become much more common as a method of payment for a variety of purchases, from online shopping to the local supermarket.

developing countries leap
developing countries, too, are open to cryptocurrencies. In Venezuela, Bitcoin has been leading a parallel currency. This gives millions of citizens with the opportunity to conduct transactions and generate livelihood, including the purchase of food and other basic needs in countries where the official currency is worth almost zero. It also allows them to purchase goods from overseas, cope with the continued strict capital controls.

In East Africa, local innovators have introduced cryptocurrency system support cross-border transactions, as exemplified by initiatives such as BitPesa.

In South Africa, cryptocurrencies become very popular. In Nigeria, traders and local activists believe the new money this presents an opportunity for economic democratization. This is driven by the fact that people in Nigeria have failed by conventional money.

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