If No One World Crypto, What Is Plausible?
While the existence of a one world cryptocurrency isn’t a plausible economic reality, cryptocurrencies can, and do, offer real world value.
While the existence of a one world cryptocurrency isn’t a plausible economic reality, cryptocurrencies can, and do, offer real world value.
A one-world crypto or fiat currency is seductive in its simplicity, but doesn’t serve anyone’s economic interest in the long term.
Here’s why.
Is it plausible for a single cryptocurrency to replace all fiat currencies?
That is, can there be a crypto-one-world currency?
While adoption isn’t widespread enough for Crypto to be used in daily transactions, they are used by community members for transactions between themselves.
Arguably the biggest criticism Cryptos get is that they aren’t “currencies”. Which, of course, begs the question, what is a currency, and where do Cryptos fit?
When markets crash, they tend to crash together. A true test of how uncorrelated BTC can be is whether it moves in lockstep with other markets during a crisis.
Perfectly uncorrelated assets are important to asset managers as they allow for effective portfolio diversification. Which is where Crypto supposedly comes in.
Relationships between asset prices and economic variables are always in flux, Crypto and gold included. Categorizing assets as “this”/“that” blinds us to this.
Moving on with our discussion of the problems of categorizing Crypto, we come to an important question – do Cryptocurrencies serve as a hedge against inflation?
Is Crypto a safe haven? Is it a a risk asset? From an either/or paradigm, one’s answer to the first question determines the second. Does it have to be so?