Will we soon have one world currency?

Why do People See Bitcoin as a one world currency?

Naturally, many people believe that Bitcoin

is destined to be the one world currency because it is the first, largest, and most widely adopted cryptocurrency. In reality, we will have many types of cryptocurrencies - both centralized and decentralized

Decentralized

Distributed amongst its users rather than controlled by one group or within one certain area.

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, fiat-backed and non-fiat backed. The idea of fiat-backed cryptocurrencies may not sound attractive to you, but they provide some important advantages. Let’s dig in.
 

Fiat Backed Cryptocurrencies (centralized)

There are actually many economic reasons why various world currencies exist instead of one world currency. One reason is that a variety of currencies enables each country to control inflation independently, which can actually help restimulate individual economies in times of need. On the other hand, if every country used Bitcoin as their internal currency and relied solely on Bitcoin’s performance and mining

inflation rate, then countries would not have the power to control inflation. Inflation control is important because it can help bail out banks (to pay back citizens) and protect against various other collapses.

Of course, these are situations that we want to avoid. The reality, however, is that people, politics, and laws governing corporations are imperfect and economic problems are inevitable. Given this, different countries have different economic cycles. This means that business growth, bank performance, and inflation adjustments experience different rates of change in different areas.

Source: Wall Street Survivor

Additionally, there is arguably a relationship between how much a country exports and the strength of its currency. Countries that depend heavily on exporting goods to other nations tend to have weaker currencies. As a result, these currencies are seen as cheaper and more competitive compared to their competition. In other words, weaker currencies allow countries to gain more market share by offering a more attractive, cheaper deal on their goods. When a country’s total exports increase, its currency may weaken. This is true for the US Dollar, which is arguably the closest thing to a one world currency that exists today; many countries accept USD as payment.

Another important thing to understand is that liquidity is critical to the success of currencies. In many ways, the currency with the most liquidity “wins.” When people ask, “what is the world currency?” people often answer that it is the US dollar because the US dollar is the most traded and liquid currency on Earth. For this reason, it is much more stable than many other currencies. This is also the reason many stores in other countries will accept USD. Now that we understand why a true one world currency does not and will not exist, let’s explore why countries will create fiat-backed cryptocurrencies - and why we should be excited about them.
 

Why would I want my country to make a cryptocurrency?

Blockchain

, the magic behind cryptocurrencies, serves as an immutable, secure, transparent, and public ledger of transactions. Imagine if your country provided you transparency to the inner-workings behind the issuance of your national currency.

Source: knoema.com

 

Here is a brief list of advantages that come with the transparency that cryptocurrencies make possible:

• We can personally calculate and track the rate of inflation, providing us not only with knowledge but the power to work more closely with the government. This would result in more economic power to individuals and potentially a more active, positive working relationship between citizens and their governments.
   
• If all governments use blockchains then all of our currencies would be more fungible

  Fungibility

  The idea that all units in a money supply are exactly equal. Fungibility is considered to be an essential aspect of effective currencies by many economists.

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  , easily traded, and interoperable.
   
• A government using blockchain technology opens the doors for more utility. Perhaps, we can also use blockchains to vote on political elections as well as more financial-related decisions. Votes would then be transparent, mitigating concerns about duped or faked votes.

Now, we’ve covered, in my opinion, the most difficult piece of information to swallow - the reasons for multiple national currencies. Next, let’s dive into the decentralized

networks we are a bit more familiar with in the industry.
 

Decentralized Cryptocurrencies

Decentralized currencies enable many applications both technically and economically. When speculating on the future of cryptocurrency, decentralized networks are yet another reason against the one world currency argument.

Decentralized currencies give us:

• dApps. Ethereum

  Ethereum

  A cryptocurrency created by Vitalik Buterin that runs on Ether (ETH). Ethereum was the first blockchain-based technology to make smart contracts and decentralized applications possible.

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  is one example out of many cryptocurrencies which allow developers to launch decentralized applications (dApps

  dApps

  Distributed Apps. Applications without centralized control.

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  ) on their blockchain-based networks. Rather than launching an application for Apples App Store, now we can launch global applications distributed over Ethereum, for anyone to access. These dApp platforms provide utility by globalizing business and introducing tokens specific to each application.
• Private currencies. Projects such as Monero, Dash, ZCash, PIVX, and others are competing to provide fiat-like currencies. Rather than being controlled by a government, these currencies are run by distributed networks, much like Bitcoin and all the altcoins.
• Crypto commodities. Many projects are launching digital assets which may represent physical assets such as gold and silver or fun, virtual collectibles like Cryptokitties. Collectible and valuable crypto assets are becoming increasingly popular.
   

There are other categories and use-cases for decentralized blockchains, but these three should provide a strong base for the utility of decentralized currencies. Amongst each category, there is lots of competition and there can be multiple winners.

There will be many popular dApps in addition to popular dApp platforms. Ethereum, Lisk, and NEO can all be long-lasting projects while competing, much like Apple and Microsoft. The same goes for privacy-oriented currencies, high-throughput focused currencies, and more. The world is large enough for multiple currencies to exist and it is even in our best interest - in case one network goes down or societies want to adopt specific currencies for economic reasons.