The current state of currencies, and what needs to be improved
"The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust." - Satoshi Nakamoto
1. Accepted
Government Fiats (Majors): 10/10. Businesses are required by law to accept the country currency, and problems are extremely rare. When moving, currencies can easilly be traded between each other (Majors, with some countries it gets more complicated).
Crypto (Bitcoin): 1/10. Some businesses are accepting it. Very few. Businesses are not very eager to accept it because of low score on other factors, in particular (4).
Gold & Silver: 1/10. Currently not very accepted, but if end up in a foreing country or international waters you could negociate... You'll enbd up paying double thought.
==> Dependant on the law and also other qualities on this list. Crypto can score 10 here.
2. Elasticity - Perfect scenario: is usued/created in parallel of GDP growth, and contracts when people borrow too much (or gdp goes down)
I think this is the main reason why we have fiats everywhere today. This feature is absolutely indispensable (and fiats make it easy).
Governement Fiats: 3/10. It's not expanding and contracting as the economy needs, but as the incompetent central banks want it to. Short version, it's just really handled terribly. It could be done right, but it is not. At least the economy is not frozen because of the currencies limitations.
Crypto (Bitcoin): 0/10. I can't speak for all cryptos, but clearly Bitcoin is absolute garbage here. The supply is limited and that's it. Hard limit. And it's not like we only mined 1% and could ignore this. Issuance is not dependant on the economy at all. If GDP triples, there won't be 3 times as much Bitcoin. Bonus negative consequences are that people have no incentive to spend any... Just "hodl" and make money for doing nothing. It's just objectively so bad.
Gold & Silver: 5/10. In a scenario where mines are highly regulated/controlled, a central authority could mint or store based on the economy need. But we all know how it always ends up... They are going to use their reserves or mine more to finance a war, or just because they got bored like the FED...
===> Perfect solution here would be a free market... With traders buying and selling the currency based on gdp. It can be issued based on the free market data for a year or something. A cryptocurrency, sure, imagine. It could have in its code this incredible feature, and the blockchain code itself would mine the right amount of coins based on the market/GDP info. Someone tell Craig Wright to do this!
3. Transportable
Government Fiats (Majors): 9/10. Pretty good for this purpose. Million in cash will be complicated. Electronically it's ok, banks will do it rapidly enough.
Crypto (Bitcoin): 10/10. Pretty much as perfect as can be. You can transport any amount anywhere as long as they have an internet connection.
Gold & Silver: 7/10. Large amounts can be transported. 50,000 usd hold in a small gold bar the size of an iphone. For millions you'll need a bank and move it electronically.
4. Stable price (including inflation)
Government Fiats (Majors): 8/10. The price is not so volatile it's impossible to use but the central banks are prone to suffocate people. The US central bank was created to prevent government from hyperinflating their currency (for example printing money to pay for a war), and it is better, but there is room for improvement. Right now central banks are printing imaginary money, as well as buying stocks, the FED has a 4 trillion balance sheet, which had the result of rendering the 90% absolutely broke. And the 10% are wealthy as ever. Over the long run, in the case of the US (this is the chart I have on tv), we see that inflation has not outpaced real gdp much. Can be improved, but it is not too bad.
The pound which is 400 or 500 years old has done well for all this time. Most majors are ok here, not sure about the recent euro.
Crypto (Bitcoin): 0/10. Well... Obviously. The main selling point of Bitcoin "to fight inflating currencies" is its main weakness. US "real" inflation means the usd only lost 35% of its value over 61 years. Bitcoin is down 52% from its high less than 2 years ago (no need to inflation ajust here, impact is tiny), and regularly loses 35% of its value in a day.
Gold & Silver: 9/10. Historically have kept a rather stable value while they were used. Value dropped hard a couple centuries ago when the spanish introduce a huge supply of new world gold to the old world. We are NOT suddenly going to start mining incredible amounts from asteroids and the ocean. That argument is beyond idiotic. People need to stop watching star trek so much. I only mentionned this to laugh at the expense of the clowns that use this argument.
5. Durable: Doesn't rot, rust or evaporate.
Government Fiats (Majors): 9/10. Paper money can get used, but you can change it, old notes get destroyed and new ones get created. Plus electronic money doesn't perish. All good.
Crypto (Bitcoin): 10/10. As long as there is no hack or bug of course :p
Gold & Silver: 10/10. Last for eternity, never has any issue.
6. Economical (to create) OR inherently valuable.
Government Fiats (Majors): 10/10. Infinite amounts of money can be created out of thin air at nearly no (direct) expense.
Crypto (Bitcoin): -1/10. 0 fundamental value unarguably (I don't even know how anyone can argue this). While creating them is more expensive than what they sell for, in 90% of the world. And as the price fluctuates this gets better or worse, usually worse. When the price goes down miners lose (unless they shorted), when the price goes up more eager new miners get excited and push the price of mining up so miners lose again.
Gold & Silver: 5/10. Actually gold is "overvalued". Its value as a commodity is not that high compared to the price. I don't really know about silver. So here it's meh. Salt probably outscore this.
7. Homogeneity
All 10/10 here.
8. Divisible
Government Fiats (Majors): 9/10. Can be divided down to tiny fractions. Electronically there is virtually no limit.
Crypto (Bitcoin): 10/10. Absolutely no limit. Can be divided infinitly. This is absolute perfection here. We cannot innovate further. Can't divide more than infinitly to any number wanted.
Gold & Silver: 7/10. Coins or blocks or electronic value at the bank? It's not that bad but far from perfection. Historically the maleability and ease to mess with made those pretty good for this, but far from perfect, and we can now do much better, we reached perfection.
9. Supervised
There has to be some sort of regulation, some way of printing the right amount. As well as a body being able to take decisions when there are conflicts or uncertainties. Also to lend money and fix interest rates. Control a country or countries debt. Controls financial institutions, in particular banks.
Government Fiats (Majors): 5/10. Central banks overdo it and suffocate every one. They are so incompetent. Yikes. Pumping the stock market and creating alot of anger hate and a political divide in the world. They may single handidly create world war 3. Maybe I should score this -10/10.
Crypto (Bitcoin): 0/10. Beurk. Alot of cryptos are using "smart contracts" and this may be a step in the right direction. But of course it is missing a lot. There could be a scenario here where the economy gets killed by its Bitcoin currency. Bitcoin could be regulated and everything but there are limits. It's built in as a feature to be totally lawless. No one can guarentee the money borrowed will be paid back. No one to act in case of an emergency. No central authority to lend money to money lenders & also set rates (so oligarchs will lend money at the rate they decide just like in the 19th century and the world will be their slaves with no light at the end of the tunnel, or during germany just before the NAZI). On this aspect, Bitcoin is one huge pile of excrement.
Gold & Silver: 10/10. Price is dictated by the free market. I love this! Jk I don't know tbh. Depends who controls the supply and regulates it.
10. Scarce/Difficult to counterfeit.
Government Fiats (Majors): 5/10. The numbers in banks database can't just magically appear right? Notes can be counterfeit if the person accepting them isn't paying much attention. Doesn't happen that often. To remedy to this rather poor attribute here comes the justice system, countries are threatening to punish those that do counterfeit their currencies.
Crypto (Bitcoin): 10/10. Unless you are stupid enough to buy "physical bitcoins" from "some dude" on the street, Bitcoin scores 10 here.
Gold & Silver: 6/10. I guess you can make fake precious metals, maybe some iron bar coated with gold. For big amounts people will check...
It's not considered most important, and currencies are able to function even without scoring perfectly here. Still... really not that great to not be at 8-10/10.
11. Easily recognizable: No slow weighing etc.
Government Fiats (Majors): 8/10. It's easy to recognize. The problem is it's not easy to be 100% sure you aren't getting scammed.
Crypto (Bitcoin): 10/10. Instant. Not much to say, Bitcoin is perfect.
Gold & Silver: 7 or 8/10. Same as fiat. With coins it would be easier maybe. Someone comes to a random person with a gold or silver nugget they might not immediatly recognize what metal that is, mistake silver for iron or palladium :D So maybe 7.
12. Secure
Government Fiats (Majors): 5/10. Hard to score this. If you got cash in your pocket it's as secure as you make it. If it's in a bank it's secure enough, but far inferior as with cryptocurrencies.
Crypto (Bitcoin): 9/10. I'm not going to give a 10, because the whole network can be crashed and everything lost. There is no central authority making backups of the blockchain :) Other than that it's as secure as can be.
Gold & Silver: 5/10. Your gold nugget can be stolen easilly. If it's in a bank vault it can't. Depends on you to protect it.
13. Cheap, quick, and easy to use.
Government Fiats (Majors): 9/10. Electronic or physical payments are cheap and rapid.
Crypto (Bitcoin): 0 to 10 /10. Depends on the tech. Right now... If a few people start using Bitcoin fees go up to $50/tx and take forever... If half the planet started using it fees would probably be in the millions and tx times would be what? years? Absolutely ridiculous. Tech itself is limited. Bitcoin just cannot be used.
Gold & Silver: 8/10. There might be some weighting required. With electronic gold or even coins, it's pretty fast & simple.
Conclusion:
Countries fiat is usuable, barely. It's just not good enough. We have to get rid of this degen money printing, there is a little too much inflation but that's not that bad.
It could be used as is, as long as the central banks are limited. That's the main issue. Central bank is doing too much, and in particular too much bad things. They have to stop trying to FORCE the economy to go up. Free to operate Businesses, Innovators, Financeers, and Global Trade are what makes an economy go up / create wealth not some out of touch bureaucrat making idiotic decisions to try and FORCE innovations somehow sdknjfsdfksdhjfsdkhj - having a stroke - IDIOTS. It's unbelievable how stupid they are. I just am amazed. Did I land on planet of the apes? F sake. Satoshi got desperate. There is reason to be.
If the central authorities were doing the job right, then current fiat currencies are actually not that bad.
Of course, they can be improved on certain aspects. There is room for innovations to make it better.
One of Bitcoin bears main argument is it is no fundamental value, it is made out of thin air. But it is a wrong argument. It has 0 relevance if a currency has value or not. It's purpose is not to hold value but to allow transactions (paul has rice and wants oranges peter has oranges but wants phones...). Bitcoin is near perfect or even perfect in terms of security divisibility durability transportability...
Bitcoin scores very high on some aspects, and terribly on other ones. You do not make an average score and go "oh that's good enough". It absolutely HAS to keep a minimum score on all aspects. It's like it cures your broken finger by chopping your whole arm off. It's just ridiculous XD "The more people know about Bitcoin the less bullish they are on it". Yup.
Precious metals are ok but we can do better. Going to be very complicated to have elasticity. Does an international government control the supply? Each country with gold mines?
Doesn't seem viable to me.
Best bet is a central bank fiat/electronic currency with rules that make sense.
1. Accepted
Government Fiats (Majors): 10/10. Businesses are required by law to accept the country currency, and problems are extremely rare. When moving, currencies can easilly be traded between each other (Majors, with some countries it gets more complicated).
Crypto (Bitcoin): 1/10. Some businesses are accepting it. Very few. Businesses are not very eager to accept it because of low score on other factors, in particular (4).
Gold & Silver: 1/10. Currently not very accepted, but if end up in a foreing country or international waters you could negociate... You'll enbd up paying double thought.
==> Dependant on the law and also other qualities on this list. Crypto can score 10 here.
2. Elasticity - Perfect scenario: is usued/created in parallel of GDP growth, and contracts when people borrow too much (or gdp goes down)
I think this is the main reason why we have fiats everywhere today. This feature is absolutely indispensable (and fiats make it easy).
Governement Fiats: 3/10. It's not expanding and contracting as the economy needs, but as the incompetent central banks want it to. Short version, it's just really handled terribly. It could be done right, but it is not. At least the economy is not frozen because of the currencies limitations.
Crypto (Bitcoin): 0/10. I can't speak for all cryptos, but clearly Bitcoin is absolute garbage here. The supply is limited and that's it. Hard limit. And it's not like we only mined 1% and could ignore this. Issuance is not dependant on the economy at all. If GDP triples, there won't be 3 times as much Bitcoin. Bonus negative consequences are that people have no incentive to spend any... Just "hodl" and make money for doing nothing. It's just objectively so bad.
Gold & Silver: 5/10. In a scenario where mines are highly regulated/controlled, a central authority could mint or store based on the economy need. But we all know how it always ends up... They are going to use their reserves or mine more to finance a war, or just because they got bored like the FED...
===> Perfect solution here would be a free market... With traders buying and selling the currency based on gdp. It can be issued based on the free market data for a year or something. A cryptocurrency, sure, imagine. It could have in its code this incredible feature, and the blockchain code itself would mine the right amount of coins based on the market/GDP info. Someone tell Craig Wright to do this!
3. Transportable
Government Fiats (Majors): 9/10. Pretty good for this purpose. Million in cash will be complicated. Electronically it's ok, banks will do it rapidly enough.
Crypto (Bitcoin): 10/10. Pretty much as perfect as can be. You can transport any amount anywhere as long as they have an internet connection.
Gold & Silver: 7/10. Large amounts can be transported. 50,000 usd hold in a small gold bar the size of an iphone. For millions you'll need a bank and move it electronically.
4. Stable price (including inflation)
Government Fiats (Majors): 8/10. The price is not so volatile it's impossible to use but the central banks are prone to suffocate people. The US central bank was created to prevent government from hyperinflating their currency (for example printing money to pay for a war), and it is better, but there is room for improvement. Right now central banks are printing imaginary money, as well as buying stocks, the FED has a 4 trillion balance sheet, which had the result of rendering the 90% absolutely broke. And the 10% are wealthy as ever. Over the long run, in the case of the US (this is the chart I have on tv), we see that inflation has not outpaced real gdp much. Can be improved, but it is not too bad.
The pound which is 400 or 500 years old has done well for all this time. Most majors are ok here, not sure about the recent euro.
Crypto (Bitcoin): 0/10. Well... Obviously. The main selling point of Bitcoin "to fight inflating currencies" is its main weakness. US "real" inflation means the usd only lost 35% of its value over 61 years. Bitcoin is down 52% from its high less than 2 years ago (no need to inflation ajust here, impact is tiny), and regularly loses 35% of its value in a day.
Gold & Silver: 9/10. Historically have kept a rather stable value while they were used. Value dropped hard a couple centuries ago when the spanish introduce a huge supply of new world gold to the old world. We are NOT suddenly going to start mining incredible amounts from asteroids and the ocean. That argument is beyond idiotic. People need to stop watching star trek so much. I only mentionned this to laugh at the expense of the clowns that use this argument.
5. Durable: Doesn't rot, rust or evaporate.
Government Fiats (Majors): 9/10. Paper money can get used, but you can change it, old notes get destroyed and new ones get created. Plus electronic money doesn't perish. All good.
Crypto (Bitcoin): 10/10. As long as there is no hack or bug of course :p
Gold & Silver: 10/10. Last for eternity, never has any issue.
6. Economical (to create) OR inherently valuable.
Government Fiats (Majors): 10/10. Infinite amounts of money can be created out of thin air at nearly no (direct) expense.
Crypto (Bitcoin): -1/10. 0 fundamental value unarguably (I don't even know how anyone can argue this). While creating them is more expensive than what they sell for, in 90% of the world. And as the price fluctuates this gets better or worse, usually worse. When the price goes down miners lose (unless they shorted), when the price goes up more eager new miners get excited and push the price of mining up so miners lose again.
Gold & Silver: 5/10. Actually gold is "overvalued". Its value as a commodity is not that high compared to the price. I don't really know about silver. So here it's meh. Salt probably outscore this.
7. Homogeneity
All 10/10 here.
8. Divisible
Government Fiats (Majors): 9/10. Can be divided down to tiny fractions. Electronically there is virtually no limit.
Crypto (Bitcoin): 10/10. Absolutely no limit. Can be divided infinitly. This is absolute perfection here. We cannot innovate further. Can't divide more than infinitly to any number wanted.
Gold & Silver: 7/10. Coins or blocks or electronic value at the bank? It's not that bad but far from perfection. Historically the maleability and ease to mess with made those pretty good for this, but far from perfect, and we can now do much better, we reached perfection.
9. Supervised
There has to be some sort of regulation, some way of printing the right amount. As well as a body being able to take decisions when there are conflicts or uncertainties. Also to lend money and fix interest rates. Control a country or countries debt. Controls financial institutions, in particular banks.
Government Fiats (Majors): 5/10. Central banks overdo it and suffocate every one. They are so incompetent. Yikes. Pumping the stock market and creating alot of anger hate and a political divide in the world. They may single handidly create world war 3. Maybe I should score this -10/10.
Crypto (Bitcoin): 0/10. Beurk. Alot of cryptos are using "smart contracts" and this may be a step in the right direction. But of course it is missing a lot. There could be a scenario here where the economy gets killed by its Bitcoin currency. Bitcoin could be regulated and everything but there are limits. It's built in as a feature to be totally lawless. No one can guarentee the money borrowed will be paid back. No one to act in case of an emergency. No central authority to lend money to money lenders & also set rates (so oligarchs will lend money at the rate they decide just like in the 19th century and the world will be their slaves with no light at the end of the tunnel, or during germany just before the NAZI). On this aspect, Bitcoin is one huge pile of excrement.
Gold & Silver: 10/10. Price is dictated by the free market. I love this! Jk I don't know tbh. Depends who controls the supply and regulates it.
10. Scarce/Difficult to counterfeit.
Government Fiats (Majors): 5/10. The numbers in banks database can't just magically appear right? Notes can be counterfeit if the person accepting them isn't paying much attention. Doesn't happen that often. To remedy to this rather poor attribute here comes the justice system, countries are threatening to punish those that do counterfeit their currencies.
Crypto (Bitcoin): 10/10. Unless you are stupid enough to buy "physical bitcoins" from "some dude" on the street, Bitcoin scores 10 here.
Gold & Silver: 6/10. I guess you can make fake precious metals, maybe some iron bar coated with gold. For big amounts people will check...
It's not considered most important, and currencies are able to function even without scoring perfectly here. Still... really not that great to not be at 8-10/10.
11. Easily recognizable: No slow weighing etc.
Government Fiats (Majors): 8/10. It's easy to recognize. The problem is it's not easy to be 100% sure you aren't getting scammed.
Crypto (Bitcoin): 10/10. Instant. Not much to say, Bitcoin is perfect.
Gold & Silver: 7 or 8/10. Same as fiat. With coins it would be easier maybe. Someone comes to a random person with a gold or silver nugget they might not immediatly recognize what metal that is, mistake silver for iron or palladium :D So maybe 7.
12. Secure
Government Fiats (Majors): 5/10. Hard to score this. If you got cash in your pocket it's as secure as you make it. If it's in a bank it's secure enough, but far inferior as with cryptocurrencies.
Crypto (Bitcoin): 9/10. I'm not going to give a 10, because the whole network can be crashed and everything lost. There is no central authority making backups of the blockchain :) Other than that it's as secure as can be.
Gold & Silver: 5/10. Your gold nugget can be stolen easilly. If it's in a bank vault it can't. Depends on you to protect it.
13. Cheap, quick, and easy to use.
Government Fiats (Majors): 9/10. Electronic or physical payments are cheap and rapid.
Crypto (Bitcoin): 0 to 10 /10. Depends on the tech. Right now... If a few people start using Bitcoin fees go up to $50/tx and take forever... If half the planet started using it fees would probably be in the millions and tx times would be what? years? Absolutely ridiculous. Tech itself is limited. Bitcoin just cannot be used.
Gold & Silver: 8/10. There might be some weighting required. With electronic gold or even coins, it's pretty fast & simple.
Conclusion:
Countries fiat is usuable, barely. It's just not good enough. We have to get rid of this degen money printing, there is a little too much inflation but that's not that bad.
It could be used as is, as long as the central banks are limited. That's the main issue. Central bank is doing too much, and in particular too much bad things. They have to stop trying to FORCE the economy to go up. Free to operate Businesses, Innovators, Financeers, and Global Trade are what makes an economy go up / create wealth not some out of touch bureaucrat making idiotic decisions to try and FORCE innovations somehow sdknjfsdfksdhjfsdkhj - having a stroke - IDIOTS. It's unbelievable how stupid they are. I just am amazed. Did I land on planet of the apes? F sake. Satoshi got desperate. There is reason to be.
If the central authorities were doing the job right, then current fiat currencies are actually not that bad.
Of course, they can be improved on certain aspects. There is room for innovations to make it better.
One of Bitcoin bears main argument is it is no fundamental value, it is made out of thin air. But it is a wrong argument. It has 0 relevance if a currency has value or not. It's purpose is not to hold value but to allow transactions (paul has rice and wants oranges peter has oranges but wants phones...). Bitcoin is near perfect or even perfect in terms of security divisibility durability transportability...
Bitcoin scores very high on some aspects, and terribly on other ones. You do not make an average score and go "oh that's good enough". It absolutely HAS to keep a minimum score on all aspects. It's like it cures your broken finger by chopping your whole arm off. It's just ridiculous XD "The more people know about Bitcoin the less bullish they are on it". Yup.
Precious metals are ok but we can do better. Going to be very complicated to have elasticity. Does an international government control the supply? Each country with gold mines?
Doesn't seem viable to me.
Best bet is a central bank fiat/electronic currency with rules that make sense.
