April 23, 2024

Cryptocurrency, Gold and Digital Central Currencies: the Rise of the Cryptocurrency with a Utility

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When gold was king and all government issued currencies were backed by it then there was a clear understanding of value. The advent of the fiat currency, which took place in 1971, was the critical point where the United States came off of the gold standard. The U.S. Dollar became what all other currencies globally used as a measure of value, it basically replaced gold as that measure.

The year 1971 was a pivotal one as various countries were seeking to redeem their U.S. Dollars for gold from the United States, most wondered if more money was printed than there were gold in reserves to cover it. Of course this wasn’t an option and President Nixon made a bold move which is still with us today, fiat currency backed by the full faith of the nation that issued it.

Over the decades the United States, Europe, the United Kingdom and other established nations sold off large chucks of their gold reserves to countries that just wanted to keep accumulating it, countries that you wouldn’t think had billions of dollars in gold just sitting in vaults today.

So this opened the door for printing paper money at will and is part of the reason why the rise of cryptocurrency has been upon us over the past few years. Digital government issued currencies may not be coming to us soon because then all will be revealed, there are no secrets at that point and every country’s true value will be exposed. So don’t expect that to be done anytime in the near future because if that happens then we potentially will have chaos in the streets globally.

Cryptocurrencies with no utility at all such as Dogecoin, IOTA, Dash and Litecoin are prime examples of how the investment community sees the cryptocurrency market, as a slot machine, some times it hits and some times it doesn’t but they keep pulling the lever.

In the case of Dogecoin and Litecoin, the founders cashed out a long time ago and really aren’t a part of the project any longer, so that should tell you a few things. The cryptocurrencies with a utility , those are the ones that will have staying power and scalability for years to come, the ones that can evolve into something greater.

Bitcoin is a store of value, it has established itself as digital gold due to the limited supply and the demand that has come with it. Now Bitcoin would never become an actual replacement for a nations physical currency as it is extremely volatile and that is not the core of a physical currency. Although El Salvador is trying to make it so and that may be the beginning of the end or it could be a new beginning for that country, who knows.

Ethereum is a scalable system that offers more than others do, from building other cryptos on its backboned to non-fungible tokens and systems that run it, its really a robust system that can grow even further over time. This is the value that they bring to the table and this is why they will outlast many others. It is decentralized which can be good and bad for some things, case in point for NFT’s, if something goes wrong with one of them then there is no coming back from it.

Another crypto that not only provides backstops to prevent holders from losing their NFT’s that were created on its backbone but also provide them with ways to escrow digital assets within it’s network to protect both sellers and buyers of these digital assets is Pecu Novus. Its a strictly a peer to peer system that allows for holders to exchange amongst each other, it has a proprietary escrow system in place that protects holders from losing their digital assets due to fraud. Also in the case of proven fraud of any sort holders are protect from losing their coins or NFT’s that are created on their backbone. It is a centralized system which can be good and bad for some things, case in point for liquidity purposes, exchanges may not carry the crypto on their systems but over time its certain that a robust ecosystem will lend to that liquidity especially as non-fungible tokens hit the scene.

Now lastly Ripple, this is an interesting one, the company issued the XRP coin some time ago but the coin has nothing to do with the company itself. The company has amazing technology, which will continue to be realized in the fintech arena over time. They have been the subject of scrutiny but that comes from the separation that the investment community wasn’t aware of for a while between the XRP coin and the Ripple company itself. It’s a robust system that will grow but how the XRP coin fits into the picture we don’t know yet however the vast interest will keep it going for some time. This is also a centralized system which can be good and bad for some things, the good things is that they may be able to prevent fraud on their system and they are carbon neutral as most centralized systems are.

The crypto community will continue to see venture capital money pour into it as we move forward, from exchanges to the actual projects, ETF’s on stock markets will continue to come and private equity will continue to look for that spark in the dark with some of the projects mentioned in this article. The point is that we are in the beginning stages of an evolution that will continue onward for some time to come.

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