From Democratic Money wiki
Revision as of 20:57, 20 July 2020 by Fcecin (talk | contribs)
(diff) ← Older revision | Latest revision (diff) | Newer revision → (diff)

The term "Cryptocurrency" denotes any fungible, virtual asset that can be traded on the blockchain that hosts it.

The name "cryptocurrency" is, perhaps, a misnomer. Things that are technically called "currency" mean things that can be used to purchase (be traded for) other things. The problem is that if the "currency" in question has an unstable valuation, then it is unlikely that it can actually function as a good currency because price denominations of goods cannot be constant values that are manually set, but mathematical functions of the price of the "currency."

Good currencies are good money, and good money is price-stable money that is backed by some sort of predictable source of capital or value. Modern money systems that are price-stable are based on central banking, e.g. the national currency of any country.

However, cryptocurrencies can, nevertheless, be used as currencies, or be called currencies. However and in general, they are best characterized as crypto assets. An asset is any tradeable item, and is more general than currency.

Some cryptocurrencies are stable. They are called stablecoins. An example of stablecoin is the PAXOS Standard Token, which is always backed by a USD reserve, and so 1 USD = 1 PAX.

The crypto in cryptocurrency or cryptoasset comes from cryptography, which is used to implement the blockchain online simulators in which these cryptocurrencies are defined.

Here's an excellent thread where Alex Howlett exposes the case for his excellent Greshm Universal Basic Income monetary/currency system. Further down that thread, I discuss crypto money, and democratic money, which Alex considers to not be real or effective (i.e. not actually worthy of the denomination of "money" or "currency"), but the thread may help to clarify the difference between non-currency bartering assets like Dailycoin or Bitcoin or Gold and real currencies/money that function as price-stable mechanisms.