… the founding ideas are promising, and something I dream of.
Before I start, just a little bit of background on me so you can understand how biased I am (😅): I’m a 16 years old programmer and I won a few crypto hackathon/funding rounds and I made a lot of friends in the field. It allowed me to get quite a bit of ETH/XMR along the way!
I see cryptocurrencies getting a lot of hate, rightly so for the number of scams, shitcoins, NFTs bullshit, “governance”, DAOs and all those often useless & snob terms.
However the founding ideas of decentralisation and freedom with your money are very appealing to me. Smart contracts are really interesting for creating your own banking operation and tokens can represent anything! It’s a world of possibilities to play with, and you get to build something useful for people!
I’d just like to add a bit of nuance tho: I see a lot of apps being built and what’s really making me laugh is the lack of open-source, decentralisation and auditing on privacy. Granted, there is a lot of fake promises, but it’s like everything, you have to find the talented people to follow.
I find it fascinating to build unstoppable, decentralised, user-first apps. I just hope that web3 stays true to its founding principles.
Hope it was interesting, tell me what you think!
EDIT: title+typos+the game is not comfortably played in Act 2
Too late:
During the Roman Empire, people used real currency: gold. Sometimes in coins, sometimes not. A given weight in gold was worth… well, its weight in gold; real currency. Some coins were made of silver, copper, or bronze; worth… their weight in silver, copper, or bronze. There used to be a fixed exchange ratio between the metals.
The Kingdom of Venice, had a problem: its merchants kept getting robbed of their gold coins, so they increasingly started storing them in safe vaults with guards outside. Some people agreed to store other’s gold coins, and gave them redeemable slips of paper or IOUs. Merchants rejoiced, as they could now write who the coins were to be paid to, without having to carry heavy coffers full of gold by themselves.
The Kingdom of Venice had another problem: they needed more and more money to trade with, but there was only so much gold around. Since they already kept most of the gold in vaults, and people used IOUs for it, they started stamping coins with a face value higher than the metal value. They gave you metal worth only 90%, 80%, 70%, 50%, 20%, 5%… for the same amount of gold; welcome to depreciation and inflation!
» This is when we lost “real money” «
They did the same with IOUs, printing more and more of them for the same amount of gold in the vaults (fractional reserve), hoping that most people wouldn’t request their gold all at once.
The United States of America abandons the gold standard, you can no longer redeem your “real money IOUs” for actual real gold, only for other “real money IOUs”. The IOUs for “real money IOUs” get stamped on cheap ass metal, printed on cheap paper, with some features to avoid forgery but that’s it.
» This is when what was left of “real money”, became “Monopoly™ money” «
Banks no longer need to keep gold, or even “gold coin IOUs”… or even “real money IOU IOUs”. They just write down in a ledger how much do they owe you, or you owe them, and that’s it. If the ledger burns up, or the dog eats it…“oops, sowwy 🥺”.
Since now banks only need to keep a number, and computers are great at keeping numbers, they start keeping the ledgers on computers. If the computer gets corrupted without a copy, or an EMP strikes it, or a hacker changes some numbers… “oops, sowwy 🥺”.
» It’s an elaborate fake-money scheme «
Take a good look at what you call “real currency” and “real money”. How much is it worth just by itself? Banknotes are plastic now, they entitle you to… more banknotes, or better yet, a bank balance (Reduce, Reuse, Recycle). Coins have nowhere the face value… and when they have, “it’s a federal crime” to melt them down to get the metal’s worth. Most people alive today, have never seen “real currency” or “non-Monopoly™ money”, not outside of a museum.
Now, you decide which Monopoly™ money you like more (and beware of scammers!).
Call me when I can pay my rent with your monopoly money. Until then it’s all monopoly and no money
☎️ Right now: take some banknotes stamped by the US Federal Reserve, and your landlord will… be maybe reluctant (was it “guilty cash” from drug trafficking? can’t risk it)… and instead ask you to call your bank so they change the numbers they got stored on yours and your landlord’s computer ledgers.
If you both would rather trust the computer ledgers of Bitcoin, DOGE, aETH tokens on the AAVE DAO, or whatever crypto PayPal has concocted recently, that’s your choice. You could pay it in Robux, or give them your PS5, or some NFT pointing to a gif of a poorly drawn ape, for all it matters.
Still better have them sign a recept in either case, though.
Right now, the only thing you need Monopoly™ USD in the US, is paying US taxes. You can pay them in Monopoly™ EUR in most of the UE, or Monopoly™ RUB in Russia… but some landlords, and even grocery stores, may still ask you for Monopoly™ USD or Monopoly™ EUR because they don’t trust whatever Monopoly™ money their government is asking for 🤷
So in other words, no. Nowhere.
People in 1st world countries are tapping smartphones because they trust the NFC to talk to a wallet they trust to connect to a server they trust to change numbers on a digital ledger they trust.
Whether the screen shows you the equivalent value in USD, BTC, or barrels of oil, you already trust digital Monopoly™ money to get from one place to another.
None of the other things you mentioned have 5% price swings every single day. It’s a mere facade of a currency fit for insane people
Not sure which things you think have, and which ones don’t, “5% price swings every single day”, or price in what, but if you check the markets, you might get surprised by how stable some things are, and how unstable others.
The value of USD has decreased by about 10% over 2 years. Over the same time period, BTC has been half and more than double its current value – a factor of 5 spread. Oil varied by a factor of 2, copper a factor of 1.5. Eggs a factor of less than 3.
Things which vary that much can make useful commodities but are terrible currencies. You have accidentally given BTC a sick burn, since anyone who tried to pay their rent in crude oil would likewise be laughed at.
Kind of the opposite:
Gold is a special case of commodity that doesn’t degrade over time, so its value doesn’t reduce intrinsically, only extrinsically through how much people are willing to give for it. It still doesn’t benefit from high volatility, particularly if you intend to use it as a store of value.
But most importantly: value is not intended to be stored long term at all. Since it comes from demand, which is only short term (compared to investment), any mid and long term value expectation is pure speculation. It seems like the last 15 years with the post-subprime and COVID stimulus of 0% and below-0% interest rates, have made people forget the basics: money needs to flow, use it or lose it.
The only mistake I could find is that US Dollars aren’t printed on paper but on cotton.
75% cotton and 25% linen… thin sheets of unwoven fibers, or “paper” 🤷
Canada Dollars are printed on plastic film, but plastic fibers can also be made into “paper”, something particularly useful for recycling. Some day, banknotes might be printed on actual trash 😆