Inspired by the statement of MSU Professor Elena Veduta. According to her opinion, cryptocurrencies do not just have no real prospects, but are also a bubble that contains risks that will provoke the subsequent weakening of the ruble. In addition to the above stated, the professor believes that the cryptosphere is nothing more than an artificially created space, which in reality does not solve any production problems.
Let’s dive into history. Many of you know that the first money appeared much later than the period of formation of the national economy. Until then, people used commodity exchange to make transactions. But this practice had its drawbacks and was not convenient, which subsequently provoked the creation of a universal exchange equivalent. So metal money appeared. Later, in China, the first paper money was created.
The first “banknotes” were not positioned as a means of payment. Their function was the “expression of value”, and they were used only to get the equivalent of this value in the number of coins. However, over time, as a result of the growing trust and interest of people in such “banknotes”, they also became a means of payment.
Around the eighth century, the first metal money appeared in Russia. Before that, people used cowry shells or necklaces made of precious metals as a means of payment. And only in the XVIII century, during the reign of Catherine II, the first “paper banknotes “ appeared in Russia, which, if desired, could be freely exchanged for copper coins. Later, with the advent of the first banks and the development of the monetary system, “paper certificates “ also began to serve as a means of payment.
As you can see, the history of the origin and development of money in Russia and in the rest of the world does not differ much. People needed a universal tool that could accurately express the value of the products and services they offered/purchased. Therefore, they all unanimously adopt a system based on the fact that they will need coins to make any transactions. This decision changes the emphasis in trade relations, making the first money the most popular resource. After all, having coins, you can buy anything you want.
There is a demand for money. The demand implies the presence of trust. People believe that the coins they receive are a valuable resource. As a result, it is on this trust that the whole power of money is based. If someone convinces people that the coins they keep are not valuable and offers an alternative-the position of a seemingly established currency will be greatly shaken. Someone will probably refuse to change the product you are interested in with this money. Or, will change, but require a price higher than usual, arguing that the weakness of the coin makes sense. As a result we will face a decrease in the purchasing power of money. Inflation.
That is why, in the modern world, it is important that the value of money is provided with something. This allows us to build and maintain human trust, making the currency more secure. Limits its issue, allowing people not to be afraid of the subsequent decrease in the purchasing power of their money.
In some cases, the currency is provided with the country’s gold reserves, in others-with debt obligations available to them, on the basis of which the States print money. What will happen if a country releases unsecured banknotes to the market? This leads to inflation. The purchasing power of money is falling, gradually making it useless. In other words, money loses the trust on which its power is based.
According to all the above stated, we can safely conclude that traditional money is highly dependent on the trust they are given. They are nothing more than a “soap bubble” that can burst at any moment under the yoke of fear and distrust on the part of the population. And there are examples of this. Refer to the history and you will find a lot of information about how various money disappeared and appeared. How the big cities crushed the smaller ones by introducing their own currency to the foreign market. Something similar is happening now. The only difference is that now we are not talking about cities, but about states. To allow a foreign currency to dominate the market within their own country, is the same to lose the war. You know that there are counteis with weak economies and strong ones. There are also countries with weak currencies and strong ones. These are some of the criteria that determine a country’s place on the world stage.
Let’s turn to cryptocurrencies. Bearing in itself the characteristics of traditional money and based on cryptographic key currencies, such as bitcoin, have the confidence of the people. The proof of this is the ratio of supply and demand, which is easy to track on the charts on the exchanges. It is also important to mention that bitcoin has a limited issue, which in itself destroys any probability of inflation. This feature is secured by the code and protected by the blockchain. Based on this, we can conclude that the price of BTC will be based only on trust from people, which will be supported by protection from inflation, the growing market around the first cryptocurrency and the services that this market will be able to offer.
In accordance with the above mentioned, we can safely conclude that Fiat and cryptocurrencies have much more in common than opponents of the crypto-market are mentioning. In addition, we also want to draw your attention to the fact that the monetary system has evolved and changed over the centuries. Then why should we interrupt this process now? Cryptocurrencies don’t have as extensive a history as Fiat. But it’s only a matter of time. Moreover, if changes in the monetary system were only negative, we would be stuck with you back in the days of the first paper banknotes. There would be no payment services, Bank cards, or online purchases. Only hand-minted coins.
Elena Veduta also said that blockchain and cryptocurrencies do not solve any production problems. But what about cross-border payments? I am sure that you have repeatedly seen news about how blockchain takes money transactions to a completely new level. Even though it is difficult for the cryptocurrencies to compete with the speed of centralized payment systems, it is cryptocurrencies that have given us the opportunity to make transactions to any end of the world, for huge amounts with a minimum commission. And all these can happen without banks and queues. Only the app on your phone or its web version in your browser. Tens of millions for a couple of dollars? Today it has become possible.
It is the blockchain that can ensure transparency of deliveries and guarantee the quality of products or medicines delivered. That is, it can perform the work that no other technology or database has been able to cope with before. And these are just the most famous examples. Then what kind of uselessness are we talking about?
To sum up, let us once again draw your attention to the fact that the primary strength of any currency is based on the trust placed in it. And therefore, any money, as well as the monetary system as a whole, by its nature, is nothing but a “Soap bubble”. The only difference is that Fiat is centralized and it can be produced as much as you want, systematically reducing the purchasing power.
You don’t believe in it, do you? Think of yourself ten or fifteen years ago. How much could you buy for a thousand rubles? Will you be able to buy the same amount, for the same thousand, today? We’re sure that you won’t.
A source: https://hub.forklog.com/dengi-eto-puzyr/
