Hello dear virtual friends, how are you today? I'm furious right now. Angry at the situation in the country, at this madness from the so-called Government, here we don't know who drinks and who pays! I wrote to you yesterday in an article that they are trying to impose taxes on us, so now they have drafted a law on the possession of digital property ... That made me think about what will happen when cryptocurrencies prevail over state currencies?
The power of a state is based, among other things, on the right to print money and manipulate it in accordance with its interests. The central bank of a state, although officially independent of the state, is in fact an integral part of it and these two entities act in full agreement. These are two systems that are mutually supportive and reflect the power of the state.
With the advent of cryptocurrencies, we have money that is not under the control of the state, but a self-regulating system. We can conclude that money over which the state has no control actually poses a threat to state money, that is, to the state itself. There is even an opinion that these are marginal threats to fiat currencies and that cryptocurrencies cannot threaten state currencies. This may be the case at the moment, but it should be borne in mind that cryptocurrencies have emerged relatively recently and that their history is much shorter than the history of national currencies. Even in a relatively short time, cryptocurrencies have managed to achieve significant success and gain their place in the financial market.
Money used to be worth it because we believed that someone would give us gold for it. After the principle of the gold base has been abandoned, there is no guarantee that someone will give us gold for money, we simply believe that someone else will appreciate the value of money and that we will be able to get some goods or services for that money. Cryptocurrencies, like gold in the post-gold standard era, have no intrinsic value and no one, in particular, has promised to trade anything for them. There is only the assumption that someone will give us in return the goods or service for the crypto that we own.
The fact is that the world's most popular types of money are those that states explicitly promise to respect and support. For states, such promises are an extremely important instrument of their power. For example, by accepting only dollars as a tax, the United States obliges its hundreds of millions of citizens to conduct their financial transactions in dollars. Because of this, everyone in the world knows they can sell their dollars to someone, even if it was to U.S. citizens.
Yet they all know that by accumulating dollars they gain certain leverage over the United States. This situation allows the United States to print its own money and thus project its power around the world. The power of printing money also gives states another kind of power: it allows them to maximize their productivity. By increasing the money supply, they can draw more people who are on the margins of the economy into the production process.
But this comes at the cost of a shortage of money because newly printed money goes directly into the pockets of the less powerful, tending to reduce the power of those who own a lot of money. Therefore, artificial money supply constraints, such as the gold standard, are often associated with extremely conservative policies. Restricting the money supply harms productivity but maintains the social hierarchy.
Cryptocurrencies threaten to completely disrupt the system of state currencies. Although they are still in limited use, it is only a matter of time before state currencies give way to cryptocurrencies. We will find out what will happen to the power of the states when the changes take place, and until then we will all be happy to collect them, even if they invent a hundred different taxes on everything we try to earn.
