You think Bitcoin is volatile, look at the history of global currencies.
Value based on market needs, emotions, fomo and real services. Welcome to the new cryptocurrency economy.
A few years ago, the behavioral scientists at VitalSmarts conducted an experiment on value, and the circumstances that influence our determinations of something we want. Certainly scarcity and abundance affect our decisions. Emotional needs are in the mix, as is peer pressure. But so is the association of an unrelated number, as discovered by behavioral economist Dan Ariely.
VitalSmarts took a room full of junior high school aged kids and paid them in dollar bills for the completion of simple tasks. After the kids were paid, they were told they could use their money to make a purchase from a table of trinkets and candy bars. Simple, right? But here’s the thing: The candy bars were double the normal price. Would the kids still buy them? Of course, it’s right there, and the money is in their hands. Most of them bought based on proximity only, not price. In other words, they couldn’t spare the time to walk out of the room and find a vending machine that offered the same thing for half the price.
So the value of the candy bar at the time had doubled within the room.
Add to the influences of value “fear of missing out” and “I want it now.”
Let’s make it more complicated by looking at what Dan Ariely did. He asked people to think of the first number on their social security card, then with that number in mind, he showed them an item and asked if they were willing to pay more or less than $100 for it. Those who had social security numbers higher than 5 were willing to pay more than $100. Those with a number under five, less.
This is remarkable, and very applicable in our day because few people understand what Crypto currency is, nobody wants to miss out on the opportunity, and the value is largely determined by forces unattached to the crypto itself.
Let’s look at a small, geographical example: The time period of 1914 to 1944 in Belgium. War and uncertainty caused many Belgians to hoard metal coins. At the same time, the National Bank moved all of its currency to London banks. Without currency in circulation municipalities printed their own emergency currencies. The German Mark and French franc entered the economy. There was another attempt to stabilize by printing a Belgian note. Values were fluctuating wildly, and by 1942 while wages stayed the same, the price of goods had risen over 650%. The economy didn’t stabilize until after the war when a standard banknote was printed and all other currencies were flushed from the system through exchanges — -which certainly left the majority of people on the losing end of the value measure.
Right now, most of us interested in crypto currency are like the kids in the social experiment, we can’t wait to buy a candy bar. The crypto landscape looks a lot like Belgium, with all the currencies flooding the economy. It will take a steadying hand to stabilize the growth, and that is the blockchain these currencies run on. By validating value via users, crypto currencies will run the course much faster than paper money in Belgium did. Before long, there will be a number of legit crypto currencies and tokens. Working on ledgers not tied to governments will eventually provide greater stability. Before long, we could be dealing only with crypto currency and all other physical forms of currency could be obsolete. This does two things: dramatically reduces corruption, and provides greater opportunities for the have-nots to prosper.
Look at this scenario: A coffee farmer in Guatemala currently has to rely on a local buyer, who then finds a global buyer who then sells to local markets. All along the way, the value of a bag of coffee beans rises as it changes hands. The guy doing all the work, gets the least amount of money, it’s the middlemen who get the lion’s share. Imagine if this coffee farmer could sell direct to customers. It’s possible on the block chain to have smart contracts so he can sell to un-trusted entities, contract with shippers and distributors — -all based on competition. He gets a bigger cut of the profits, improves his operation, pays his people more to keep them because the guy next door is doing the same thing and they have to compete for workers.
How does this affect the average person in America?
Because the block chain eliminates the middleman, there are a number of benefits for the average consumer: peer-to-peer commerce eliminates the need to be an Amazon associate to sell your books. You keep more profit, the buyer pays less. Send money to friends and family with a lower transaction fee. Hire subcontractors, find a ride to the airport, a vacation rental…by using crypto currency on the block chain, we eliminate all those profits middle men distributors, traders and facilitators were skimming off the top. Think of it as a kind of worker’s rights movement that puts more of the profit and control into the hands of the people who actually produce the work.
DapCoin.com. See for yourself.