Choice in Currency. Why Flexa and the Spend App are Such a Big Deal.

As Forbes reporter, Michael Del Castillo rightly says, the launch of the Flexa app Spend is a big deal.[1] Twenty years ago the birth of the Internet opened up the space for competing search engines. The ability to pay for coffee or your shopping at Wholefood Markets in Bitcoin, Bitcoin Cash, Ether or Gemini Dollar opens up the currency space to competition. We all know Google won the search engine race. But which currency will shoppers prefer?

Flexa is giving people the opportunity to choose the currency they prefer

“Companies now officially accepting these cryptocurrencies, according to Flexa, are Barnes & Noble, Baskin Robbins, Bed Bath & Beyond, Caribou Coffee, Crate & Barrel, Express, GameStop, Jamba Juice, Lowe’s, Nordstrom, Office Depot & OfficeMax, Petco, Regal Cinemas, Ulta Beauty and Amazon-owned Whole Foods Market. And of course, there’s Starbucks, in spite of not being part of the official launch.”[1]

On 25th September 1975 the economist and Nobel laureate, F.A. Hayek, gave a talk that was later published under the title: Choice in Currency: A Way to Stop Inflation.[2] In the talk, Hayek suggested a market place of competing currencies in the same way we have a choice of which store to shop at would be a good thing. The competition would help keep currencies honest as people would prefer currencies that maintained their value over currencies that lost their value due to over issue.

By the time Hayek gave his talk stable money was already history. President Nixon took the US off the gold standard in 1971. The result as immediate rampant inflation. We have been living with depreciating fiat currencies ever since. The US dollar loses on average 33% of its value every ten years.


[2] F.A.Hayek Choice in Currency, The Institute of Economic Affairs 1976.

Inflation when ballistic as soon as the government lost the discipline of the gold standard

Inflation has meant the end of savings. But the rot goes much further than that. Real worker wages peaked in the US in 1971. They have never recovered. Nor has the growth rate of the US economy during the past 49 years ever matched what it was with a stable currency. Few people today realize that for most of its history money in the US has been stable. The last 49 years of floating fiat money are an anomaly, to say nothing of disaster.

Floating fiat currencies do nothing for the well being of people, or prosperity of the nation.

With Flexa, Hayek appears to have got his wish. It looks like the monopoly of government-issued currency is ending. Market forces are being allowed to determine which currency people use as a means of exchange. I personally feel we are witnessing history in the making.

But which currency will people choose?

Currently Flexa currently only supports Bitcoin, Bitcoin Cash, Ether, and the Gemini Dollar. If Hayek was to hazard a guess as to which was likely to become the preferred method of payment I think he would say none of them. This is why.

Bitcoin, Bitcoin Cash and Ether are notoriously volatile. Volatility and money are like chalk and cheese. They simply do not go together. People want to know the cost of the goods they are paying for, not how much their currency has fluctuated. Crypto-currencies provide ample opportunity for speculation and can be, like commodities a store of value. But as a means of payment, they are non-starters.

Then there is Gemini Dollar, a stablecoin, regulated in the US, where the coin is pegged to the value of the US dollar. The word “stablecoin” suggests that the Gemini Dollar is getting close to the kind of currency people want. Hayek would disagree.

The “stable” in “stablecoin” is an abuse of language. Because of its parity with the US dollar, Gemini Dollar depreciates at the same rate as its fiat equivalent. Inflation eats away at the Gemini Dollar as it does to the US dollar. Putting the US dollar on the blockchain does nothing to improve the way inflation has ravaged the wellbeing of people and the economies of countries.

Flexa is in partnership with the Gemini Trust Company, an issuer of the Gemini Dollar. This seems to be the reason why the Gemini Dollar is one of the available currencies. What other reason could there be? What difference does it make to pay for your coffee with a Gemini Dollar rather than a fiat dollar? There is no change in the monetary characteristics of the transaction. Nor does the Gemini Dollar represent the creation of alternative finance in the way Bitcoin does. Because of its redemptions into fiat Gemini Dollar, and other stablecoins like it, are in fact part of the fiat system. They are the same old system with a blockchain wrapper.

This lack of genuine contenders in the current Flexa offering for a currency people will actually want does not undermine the importance of the occasion. Because of Flexa we now have a competitive market for currency. It is the birth of this competitive arena that will inevitably produce winners and losers according to which currency can best meet people’s needs.

Google won in the search engine space because it had a better search algorithm. The best product does not always win. VHS over Betamax, Word over Wordperfect are some examples where factors other than superior quality held the day. However, if the best currency does win it is clear from both Hayek and the history of money since before the first coins in the 8th century B.C. that it will be stable money.

A week before the launch of Flexa the world’s first stable money since 1971 returned. Called Saver Token, the currency tracks the US Consumer Price Index (CPI-U). This makes the tokens stable in the true meaning of the word. A “Saver” is designed to buy the same goods in 5,10, or 30 years’ time as it does today. I would suggest Flexa adds Saver Token to its list and let us see what happens. Flexa has started giving people the opportunity to choose what kind of currency they want.