Cryptocurrencies are the natural byproducts of a digital revolution and globalized economy thoroughly reliant on market exchanges as a means of pricing goods. Purely mathematical in nature and exchanged with a complex series of encryptions, cryptoucrrencies like Bitcoin are highly secure, fast, and largely untraceable. They are also a decentralized currency, which means neither governments nor banks or any one group of individuals controls the use of cryptocurrencies. They are currencies that transcend government interference, which is helpful when dealing with corrupt and dysfunctional governments, and break the monopoly banks have over the global supply of money.
So good are the upsides to cryptocurrencies that a growing number of people would like to replace their national currencies with cryptocurrencies. In the US, the advantages to abandoning the dollar are minimal, but poorer and/or highly dysfunctional nations like Kazakhstan could actually use cryptocurrencies and a global cryptocurrency market to help stabilize their national economies. In a globalizing economy, national borders, regulations, and taxes are seen as little more than obstacles, so the ability of cryptocurrencies to transcend national and economic institutions makes the adoption of cryptocurrencies extremely appealing to many individuals. There are, however, other factors to consider.
When it comes to things like cryptocurrencies, who is empowered matters as much as who is disempowered. Cryptocurrencies disempower governments and the wealthy, but they empower the technically apt by making them rich instead of bankers, thus disempowering the technically inept. Cryptocurrencies enrich and empowers those capable of “mining” the currency. This means cryptocurrencies actually transfer power from social institutions like governments and economic institutions like banks to a technically gifted class of individuals. Although cryptocurrencies decentralize the regulation of money and diffuse the responsibility of bookkeeping across the globe, they also concentrate power into the hands of an emerging elite class.
When power is concentrated into the hands of government, abuse follows. When power is concentrated into the hands of the wealthy, abuse follows. The same is true when any kind of power is concentrated into the hands of any social class. Concentrating power into the hands of a technically-gifted elite class will result in abuse. Wealth and all other forms of power must be diffused across the socioeconomic spectrum in order to protect society and all people from the abuse of power. For the longest of time, people looked to the stock market as a means to “democratize” corporations. In reality, the ability to buy ownership in corporations largely benefited the already wealthy, which helped them expand their wealth and influence. The same false empowerment exists with cryptocurrencies.
Furthermore, investors are interested in cryptocurrencies, because there is room for growth and monetary gain. The value of cryptocurrencies grow like the value of dollars. The question is whether or not there is enough faith in cryptocurrency markets to maintain their stability. Because there is a set number of coins that can exist, the adoption of cryptocurrencies would be better than returning to the gold standard in terms of economic stability, but there is also a question of faith and longevity. There probably is more than enough faith among certain groups to keep currencies like Bitcoins alive. In trying to institutionalize cryptocurrencies, however, cryptocurrencies must also inspire the same level of faith as “paper money” in all the Peoples of the world.
The problem with cryptocurrencies is that they are purely global currencies and priced based on market exchanges. Cryptocurrencies are truly the evolution of exchange markets. The problem with exchange markets is that they are increasingly being decoupled from reality. In reality, people with diverse needs live and work in highly diversified economies. A Chinese worker can make much, much less than what an American worker can make, thus the exchange rate, i.e. the cost, of basic goods and services must be lower in China. People in Haiti cannot afford to buy Haitian produced goods, if they are based on globalize prices. Cryptocurrencies are part of an economy that excludes the needs of people.
Cryptocurrencies can be a useful means to transfer money around the globe. Utilizing cryptocurrencies as a national or global currencies is, however, a step-forward in creating a global economy that does not actually serve the interests of the world’s population. It is part of an effort to erase the protections of national borders and government oversight as well as means to transfer wealth to a global elite class. It is part of an effort to decouple the economy from reality, so the needs of actual people no longer matter. The economy needs to function in such a way that serves the needs and wants of all the Peoples around the world. Growing income inequality within wealthy nations and across the globe is all already preventing people from participating in a globalizing economy. Cryptocurrencies promise to accelerate this trend.
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