Fiat Standard type

The Fiat standard can have three different types, such as utopian, involuntary, and standard currency management. In practice, only the last two are seen so far.
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Standard utopian paper. For academic interest, this type is included for discussion.

The philosophy behind the acceptance of this rule is that it is now desired primarily for the money it will bring to the individual in the form of goods and services, and not to replace it, whether in the weight and fineness of gold or silver. Its proponents anticipate that the government seal and the attribute of legal value are all necessary to approve the money issued under this standard. So following this line of thinking, it is said that there is no need to build gold stocks as required in the case of standard gold.

On the other hand, its main drawback is that the money to be put into circulation is unspecified by any commodity and is therefore irreversible. Therefore, critics point out that this standard carries high risks of unrestricted inflation.
Voluntary Paper Rule. When a nation, in the gold or silver standard, finds itself in a serious state of inability to exchange its money, that state leads to the result of an unwanted standard paper on its way.

This situation is often seen as a result of a war. Thus, despite the government’s desire to return its paper money, circumstances prevent it from doing so. However, the government and the people are still passionate about the hope of one day returning the gold or silver standard.


Do you need to buy Bitcoin?

As the world’s number one cryptocurrency market, Bitcoin has made headlines and serious ups and downs in the last 6 months. Almost everyone has heard of them, and almost everyone has an opinion. Some may not understand the idea that a currency of any value can be created out of nothing, and others love that something without government control can be traded as a valuable entity.
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Where are you sitting “Should I buy Bitcoin?” The barrier probably boils down to the question: Can I make money with Bitcoin?

Can you make money with Bitcoin?

In the last 6 months, we have seen the price go down to $ 20 a coin in February, $ 260 a coin in April, down to $ 60 in March and go up to $ 130 in May. The price is now set at around $ 100 a Bitcoin, but then what happens is anyone can guess.
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The future of Bitcoin is ultimately based on two main variables: the adoption of a wide audience as a currency, and the non-prohibition of government intervention.
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The Bitcoin community is growing rapidly, interest in crypto currency has spread tremendously on the net, and new services are increasingly supporting Bitcoin payments. The blogging giant, WordPress, supports Bitcoin payments, and African mobile app provider Kipochik has developed a Bitcoin wallet that will allow Bitcoin payments in developing countries.
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We have already seen people make millions with money. We are seeing more and more of the number of people experiencing living in Bitcoin alone over the months, while recording the experience of watching documentaries.
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You can also buy food to take to Boston, coffee to London and some cars on Craigslist using Bitcoin. The search for Bitcoin has increased in 2013, with an increase in April and then a fall in the price of Bitcoin. Last week, SatoshiDice made the first major purchase of a Bitcoin company for an online gaming site in exchange for 126,315 BTC (about $ 11.47 million) from an unknown buyer.
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This rapid growth in awareness and exploitation seems likely to continue if confidence in the currency remains strong. This leads to a second addiction. Government regulations.
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Although it is specifically designed to work independently of government control, Bitcoin will inevitably affect governments in some way. That has to be the case for two reasons.
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First, to achieve high levels of adoption, Bitcoin will need to be available to a wide range of people, which means expanding beyond the realms of hidden transactions to ordinary day-to-day transactions for individuals and businesses. Second, these Bitcoin transactions could become a continuing part of people’s tax wealth, which must be declared and regulated along with any other type of wealth.
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The European Union has already stated that Bitcoin is not classified as a Fiat currency, or as money, and therefore will not be regulated by itself. In the US, 50 state systems and the bureaucratic bodies involved have inevitably complicated decisions without reaching a consensus so far. Bitcoin is not considered as money, but it is considered to act as money.
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A thriving U.S. Bitcoin market has a more secure future for now, and any crucial U.S. legislation could have a very positive or very negative impact on Bitcoin’s future.
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So should you buy Bitcoin?

The answer largely depends on the anti-risk attitude. Bitcoin will certainly not be a smooth investment, but the potential of this currency is great.
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Advantages of Panaesha Capital Exchange (PCEX)

The cryptocurrency market grew in 2017-2018; the total market capitalization of cryptocurrencies reached $ 700 billion last year. With the tremendous market potential offered by cryptocurrencies, digital currency trading is booming and within a year several cryptocurrencies were launched and are still developing further. Cryptocurrencies are platforms where traders can exchange cryptocurrencies for other cryptocurrencies or fiat currencies.
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The Panaesha Capital Exchange (PCEX) is a cryptocurrency trading platform that will be launched in the 3rd quarter of 2018. PCEX is secure, fast, offers great liquidity and uses a broker channel for added security. The platform is the only trading solution; offering cryptocurrency to cryptocurrency exchange and cryptocurrency to currency exchange.

Advantages of PCEX

Multifunctional Exchange Platform

Many crypto-exchanges, even prominent platforms, only support crypto-to-crypto trading, forcing traders to conduct their activities in multiple exchanges. Cryptocurrencies first buy cryptocurrencies in a particular fiat currency exchange platform and then distribute the currencies across various trading platforms to ensure liquidity and profits. To convert fiat digital currencies, traders have only a few platforms to choose from. PCEX is a comprehensive solution that offers high liquidity; crypto-traders can do all their trading on a single platform and also ensure significant profits.
High liquidity

To promote the liquidity of PCEX’s digital assets, the platform includes all the key attributes for rapid exchange;

Easy user interface to facilitate the transaction process. It is similar to the format of the PCEX National Stock Exchange, for knowledge.

Low transaction fees (PCEX requires few trading fees on the platform).

Sophisticated buying-selling procedure through a matching main engine. They will make a quick trade order on the platform.

Matching a large caliber order

PCEX users are offered a limited trading procedure to buy or sell assets at the price set by them; it will try to improve the matching engine sales by matching users with a better trading price in a limited time. The time limit will be set by the traders and then the trading order will be removed from the platform. PCEX has the ability to match orders quickly through an excellent order matching engine.
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Cheap rates

For trading on PCEX, crypto traders will pay only two fees: transaction fees and withdrawal. PCEX’s transaction fee is much lower than the fees for other platforms that offer similar services. A significant portion of transaction fees goes to PCEX brokers and sub-brokers; the platform will receive a smaller portion of the cut.

Broker and Sub-Broker channels

Crypto-trading brokers and sub-brokers is a unique feature of the PCEX trading platform. Crypto-exchange platform traders typically have poor customer support and a slow reaction time. PCEX solves this inconvenience by using a fleet of brokers and sub-brokers to personally assist traders in each trade. Only one point of contact will be assigned to PCEX merchants, and they can be contacted at any time to request assistance. There will be no dark period of no response with PCEX.

Through the Broker channel and extra services, PCEX aims to create long-term relationships with users. The broker channel adds a layer of security to the platform.

Great Security

By the way, PCEX has several security layers. The platform has a Clark-Wilson Model of security architecture to ensure data integrity. The security system will verify that it supports PCEX information so that all data breaches can be prevented at once. Secure platform operations require the cooperation of auditors; there are devices and identities to protect the website. PCEX provides crypto traders with a level of security that is waterproof and keeps traders ’identities and digital assets safe from hackers and unforeseen losses.

All PCEX users, brokers, and sub-brokers must complete the KYC / AML protocol; PCEX is preparing for any regulations that may arise in the future. Traders can also ensure legal behavior on the platform.


Cryptocurrency is a volatile trading environment, with prices falling almost daily and peaking. Price volatility depends on national or state regulations, security, acceptance of digital vendor currencies, large players, and so on. Cryptocurrency trading offers a much higher return on investment than the traditional stock market; early investors in cryptocurrencies made millions in profits in 2017-2018.

In order to sustain the growing demand for digital currency and digital currency trading platforms, PCEX is taking an advanced framework with full-service tools. Everything a crypto trader will require to trade smoothly and effortlessly is available at PCEX. In fact, PCEX makes an extra mile.

Browse the new and extraordinary crypto exchange at http://www.pcex.io.

Overview of the Bitcoin Exchange

Technology is leaping forward. New terms and systems for business and communications are being introduced every day. The Internet has made a significant contribution to this progress; especially in terms of business. Online trading or online currency trading has recently attracted many traders. A common form of online trading is the Bitcoin Exchange.

What is Bitcoin?

Bitcoin exchange is a new monetary system on the Internet that works on the concept of digital currency. It initiates a peer to peer payment system for people who do not have a central authority. It introduced a new concept of cryptocurrency that was introduced in 1998. Cryptography controls the generation and transaction of digital money. Bitcoin operates through a software system and has no central control authority, so it is managed and controlled equally by users around the world.

Operation of the Bitcoin Exchange

It can work with Bitcoin exchange just as it works with any other currency exchange. Just like working with banks, it’s easy to make transactions through the Bitcoin Exchange. Similar to physical trading, the user has to pay to buy Bitcoins. The difference is that people need to open an account with some Bitcoin Exchanger. The user’s paid goods will be available in digital currency that can be used to purchase any type of product. Bitcoin can also be exchanged with other bitcoin holders. This system works similar to bank money exchanges.

Making transactions

In almost all payment systems, payments can be refunded after a transaction via PayPal or credit cards. But with Bitcoin, the situation changes because you can’t recover or go back after a transaction. So be careful when you exchange your bitcoins with currency supports, as you may have problems loading them. It is best to exchange with other bitcoin owners next to you.

Advantages of Bitcoin Exchange

Bitcoin currency exchange is relatively new. It’s a kind of basic software payment system where you make transactions digitally. Here’s how it can benefit:

· Make transactions faster than other systems

· Always available for transactions

· Make transactions from anywhere in the world

· Make transactions more secure

· Make transactions without third party interference

· Monitor all transactions from your home computer or smartphone

· Buy any type of asset using bitcoin

Disadvantages of Bitcoin

Bitcoin exchange is an innovation in the world’s economic systems. When used almost, some drawbacks also appear. Some of them are:

Ø Market acceptance

The number of Bitcoin users is growing, but it is not yet a widely used currency or exchange system. His level of acceptance in financial matters is still low.

Ø Instability

Because Bitcoin is not commonly used, it is not a stable currency. However, there is hope to reduce this instability as the list of users in the market and the number of bitcoins become easier to use.

Ø Partial development

A big problem is that Bitcoin software is in beta and there are some imperfect functions that still need to be fixed. New modules are being developed to make bitcoin exchange safer for everyone.

Getting started with Crypto

Investing in the Crypto Currency market space can be a bit daunting for a traditional investor, as investing in Crypto Currency (CC) directly requires the use of new tools and the adoption of new concepts. So if you decide to immerse your fingers in this market, you want to have a very good idea of ​​what to do and what to expect.

CC buying and selling requires you to choose an Exchange that deals with the products you want to buy and sell, be it Bitcoin, Litecoin or more than the other 1300 tokens in play. In previous editions we have briefly described the products and services available in some exchanges to get an idea of ​​the different offerings. There are so many exchanges to choose from and everyone does things their way. Find things that are important to you, such as:

– Deposit policies, methods and costs of each method

– Withdrawal policies and costs

– What fiat currency they use for deposits and withdrawals

– The products they sell, such as cryptocurrencies, gold, silver, etc.

– Operating costs

– Where is this Exchange? (USA / UK / South Korea / Japan …)

Get ready for a detailed and lengthy Exchange setup procedure, as Exchanges generally want to know a lot about you. It’s similar to setting up a new bank account, as Exchanges are stockbrokers, and they want to make sure you’re sure what you’re saying and that you’re a reliable person to deal with. It seems that “trust” is gained over time, as exchanges typically only accept small amounts of investment to begin with.

Your Exchange will store your CCs for you. Many offer “cold storage,” which means your coins are kept “offline” until you indicate that you want to do something with them. There is considerable news that the exchanges are being hacked and many coins have been stolen. Consider that your coins are in an Exchange bank account, but remember that your coins are digital only and all blockchain transactions are non-refundable. Unlike your banks, these Exchanges do not have deposit insurance, so keep in mind that hackers are always there trying to get and steal your Crypto Coins. Exchanges generally offer password-protected accounts, and many offer two-factor authorization schemes – something that should be taken seriously to protect your account from hackers.

Considering that Hacker likes to capture Exchanges and your account, we always recommend using a digital wallet for your coins. It’s pretty easy to move coins between your Exchange account and your wallet. Make sure you choose a wallet that handles all the coins you want to buy and sell. Your wallet is also a device you use to “spend” with merchants who accept your coins for payment CC. The two types of wallets are “hot” and “cold”. Hot wallets are very easy to use, but they reveal your coins on the Internet, but only on your computer, not on the Exchange server. Cold wallets use offline storage media, such as specialized hardware memory sticks and simple paper printing. Using a cold wallet makes transactions difficult, but they are the safest.

Your wallet has a “private” key that allows you to start all the transactions you want to start. You also have a “public” key that is shared on the network so that all users can identify your account when they participate in a transaction with you. When hackers get your private key, they can take your coins to wherever they want, and it’s irreversible.

Despite all the challenges and wild volatility, we are confident that the underlying blockchain technology is a game changer that will reverse the way transactions are conducted in the future.

Thinking of investing? Think Bitcoin Way

What is Bitcoin?

If you’re here, you’ve heard of Bitcoin. It’s been one of the most frequent news stories in the last year or so – as a quick enrichment scheme, at the end of finance, as the emergence of a truly international currency, as the end of the world, or as an improved technology. world. But what is Bitcoin?

In summary, it could be said that Bitcoin is the first decentralized money system used for online transactions, but it will probably be useful to dig a little deeper.

We all know, in general, what “money” is and what it is used for. The most significant problem seen in the use of money before Bitcoin is that it is centralized and controlled by a single entity: the centralized banking system. Bitcoin was invented in 2008/2009 by an unknown creator nicknamed ‘Satoshi Nakamoto’ to bring decentralization to money on a global scale. The idea is that currency can be traded on international lines without any difficulty or fees, that checks and balances would be distributed worldwide (only in the books of private corporations or governments), and that money would be more democratic and democratic. equally accessible to all.

How did Bitcoin start?

The concept of Bitcoin, and cryptocurrency in general, was started in 2009 by an unknown researcher Satoshi. The reason for the invention was to solve the problem of centralizing the use of money based on banks and computers, which many computer scientists were not happy with. It has tried to achieve decentralization without success since the late 1990s, so when Satoshi published a document that provided a solution in 2008, it was very welcome. Today, Bitcoin has become a popular currency for Internet users and has created thousands of ‘altcoin’ (non-Bitcoin cryptocurrencies).

How is Bitcoin made?

Bitcoin is done through a process called mining. Just as paper money is made through printing, and gold is extracted from the ground, Bitcoin is created through “mining”. Mining involves solving complex mathematical problems about blocks using computers and adding them to a public textbook. When it started, all you needed to make a simple CPU (like your home computer) was mine, however, the difficulty level increased significantly and now you will need specialized hardware, including a high-end Graphics Processing Unit (GPU). take out Bitcoin.

How do I invest?

First, you need to open an account with a trading platform and create a portfolio; You can find some examples by searching Google for “Bitcoin trading platform” – they generally have names that have “currency” or “market”. Once you enter one of these platforms, you click on the assets and then click on the cryptocurrency to select the currency you want. There are many very important indicators on every platform, and you need to observe them before investing.

Just buy and hold on

Although mining is the safest and somehow the easiest way to earn Bitcoin mining, there is too much fuss involved, and the cost of electricity and specialized computer hardware makes it inaccessible to most of us. To avoid all this, just do it yourself, type in the amount you want directly from your bank and click “buy”, then sit back and watch the price increase as your investment increases. This is called exchange and it often happens. it exchanges the platforms currently available, with the ability to trade between many different fiat currencies (USD, AUD, GBP, etc.) and different cryptocurrencies (Bitcoin, Ethereum, Litecoin, etc.).

Bitcoin trading

If you know stocks, bonds or Forex exchanges, then you can easily understand crypto trading. There are Bitcoin brokers that you can choose from, such as e-social trading, FXTM markets.com and many more. The platforms offer you Bitcoin-fiat or fiat-Bitcoin currency pairs, for example, BTC-USD means to exchange Bitcoins in US dollars. Look at price changes to find the perfect pair for price changes; platforms offer price among other indicators to provide appropriate trading advice.

Bitcoin as a share

There are also organizations that allow you to buy shares in companies that invest in Bitcoin – these companies trade back and forth, and you just have to invest in them and wait for your monthly benefits. These companies pool digital money from different investors and invest in their behalf.

Why should you invest in Bitcoin?

As you can see, investing in Bitcoin requires some basic knowledge of the currency, as explained above. As with any investment, it comes with risk! The question of whether to invest depends entirely on the individual. However, if I were to give advice, I would be in favor of investing in Bitcoin, for a reason that Bitcoin continues to grow – although there has been a significant rise and break, it is very likely that Cryptocurrency will continue in its entirety. increase in value over the next 10 years. Bitcoin is the largest and most popular of all cryptocurrencies today, so it’s a good place to start, and the safest bet today. Although volatile in the short term, I suspect that you will find that Bitcoin trading is more profitable than most other companies.

Collecting Bitcoins for use in a transaction

The big question is how to get bitcoins.

Once you get a basic understanding of what Bitcoin is and how a wallet actually works, you may want to get into the world of digital currency and get a little bit of bitcoin. So, the big question comes to mind: How do I get bitcoins?

It becomes difficult.

Once you have gained knowledge of the origin of each bitcoin based on a mining process, you will think that the best way to get them is to join this mining process. The thing is that this has become very difficult because the popularity of cryptocurrency is growing rapidly.

Selling products or services.

Each Bitcoin comes as a result of a previous transaction. So the way to get them, when you don’t have them, is to receive a transaction from someone else, when you buy them in cash or even mine new bitcoin.

When you know a person who uses bitcoins, you can ask them to get bitcoins. If you don’t know anyone who owns them, you can get bitcoins by offering another type of transaction with another bitcoin user, and as a result, they pay you bitcoins. The alternative is to take it out yourself.


If you can’t buy bitcoin from someone else, you can get it by mining. The term mining means here: solving a complex mathematical problem that aims to validate the transactions of other people. In return they reward you with bitcoins. Receiving bitcoins is sometimes free, but a fee may be included for sending them, depending on the online platform you use. Before getting into bitcoins mining, you need to understand that there is no easy way to get bitcoins, it needs some technological knowledge, it may not be practical for you.


Just in case, you don’t know anyone who owns bitcoins, you don’t have anything to sell for bitcoin, if there is a way to buy bitcoins. There are several online platforms that sell bitcoins through a process called trading / exchange. Here are some ways to buy bitcoins:

Buy bitcoins from a person.

There are online markets where you can buy bitcoins in an interpersonal scheme. You can pay these people in cash or in other ways. It is best that you and the seller can arrange the payment method: cash in person, cash by deposit, bank transfer, PayPal, etc. The key element here is finding someone you can trust. A good tip is to use a reliability service so that you can protect yourself against any kind of fraud. The good thing about these online bond platforms is that they all need to upload a scanned ID, which ensures security in transactions.

Buy bitcoins in exchange and from the store.

Bitcoin exchanges or outlets are basically online services that make it easier for buyers and sellers to make bitcoins transactions. To be a part of them, you need to create an account and verify your identity before buying or selling bitcoins.

Buy bitcoins through an ATM.

Some cities around the world offer bitcoin ATMs. You just get your bitcoins through them using local fiat currency. Governments regulate the use of these ATMs for security purposes. Sometimes it can be difficult to find an bitcoin ATM near your location because the location where these are installed is also regulated.

I Stack Silver: The News Is A Lie

I accumulate silver because the news is a lie

I accumulate silver because it makes sense. A person should live in a bubble to ignore the events we see and hear every day. I’ve learned that the main news is just propaganda. A person simply needs to pay attention to the way different news channels report the same story. If you watch a news item on one news channel, it is completely different from what is reported on another channel. What I’ve found is that newscasts are like listening to music on a radio. We choose to tune in only to what we agree with. A news company that chooses to use a person usually matches the point of view that a person wants to hear. I accumulate silver because the news is a lie.

There is no News with Truth and No Truth with News

If you hate Trump you hate Trump you hear a ‘news’ channel. If you love Trump, you don’t tune in to those channels. A Trump lover will see the “news” in the “news” that informs love stories about the Trump issue. Whatever your political opinion, most people will agree that there are “news outlets” based on the agenda.

You certainly won’t find your reason to accumulate silver in major outlets, because everything is literally propaganda. Unfortunately, many people receive their “news” from social media websites to make things much worse. There really is no real news organization. What the American public and the world see is just an agenda-driven machine. This machine will convince you that silver is a huge investment. The average American will tell you that even though silver has value, they think it’s not money.

News It’s a Joke

I am NOT a Republican, nor a Democrat. However, it is clear that the media is controlled. There are hidden forces that promote the agenda of powers that are controlling all aspects of American life. I will not discuss this opinion, because reality is everywhere. Schools, books, social media, TV shows … I accumulate silver simply because what I see on the news is not based on reality.

The whole world’s media is an agenda-driven machine. Once I started to get rid of the motives driven by the agenda, what I saw woke me up … The urge to accumulate silver has grown because I see what comes from the prism of history. You can leave me as a looi and if you do, I don’t care. But you owe it to yourself and your family to at least do open thinking. Analyze economic history. Look at the Weimar Republic. Take a moment and see how the Roman Empire collapsed when they underestimated their currency. Ignore me if you want but you can’t ignore history.

My obsession with stacking silver began when I first heard the phrase fiat currency.

I accumulate silver because of History

It all started to fall into place when I watched Mike Maloney’s series The Hidden Secrets of Money at random. This video series is very well done and explains the US dollar through the prism of history. Not only did what I learned surprised me immensely … it changed my whole daily life. The content of the video (and the entire series) shocked the audience. Once I started to see how history played out I realized that I had been working since I started many years ago. The whole financial system has been turned against all the peasant citizens. Simple little facts like inflation are a lie. Inflation is not ‘normal’. It is manufactured to keep the U.S. dollar alive and make the rich even richer. Inflation is just a silent tax, and the top 1% of America’s wealth remains at 1%. When I say this out loud a lot of people say I’m crazy. A ‘conspiracy person’. However, Voltaire said this and lived more than 300 years ago. Silver was about a thousand years old before it made its famous statement.

Voltaire’s quote

“Paper money eventually returns to its original value: zero”

Soon history will repeat itself when the dollar falls. It is possible that hyperinflation has already taken hold and the end has begun. The next reset may be a few days from now or a few days from now. The hidden truth is that it can’t stop. The world’s debt is too great and society too corrupt. I thought that America alone had failed, but it is the whole financial system of all the nations of the world. History shows us that a fiat currency cannot survive. History also shows us that the American financial system is going to resurrect another. I agree with what Mike Maloney said yesterday. What will happen to the price of silver will be “between astronomical and infinite”.

History Comes Again

The main reason for the accumulation of silver is that I have learned that the United States is controlled by a small group of wealthy people. You can take your eyes off and discard them, but that’s your choice. I know what will happen when the dollar falls and falls.

We don’t know when the dollar will fall. I accumulate silver to survive when that moment arrives. I hope to have time to accumulate more silver, but no one knows when the time will come. I’ve heard that you can’t eat silver the dumbest thing I’ve ever heard. My simple answer is that I am accumulating silver and storing food and water.

I am accumulating silver because I did my research and the truth is right before our eyes. It’s sad that most people reject it and do it without research. The “truth” is simply accepted and the march of daily life goes on. John Q. The audience watches the news and swallows the story and continues with his day. I wonder if American Idol will be revived? (Bread and circus)

The main reason I accumulate silver is that I see it as a way to survive in addition to being silver, as well as when it is restored to progress. And it will be reset.

This article is part of a series.

What is Bitcoin and why is Cryptocurrency so popular?

Bitcoin has been the word in the financial field. In fact, Bitcoin has exploded into the scene in recent years and many people and large companies are jumping into the path of Bitcoin or cryptocurrency as part of the action.

People are completely new to the cryptocurrency space constantly asking this question; “What is Bitcoin really about?”

Well, for starters bitcoin is actually a digital currency that is out of the control of any federal government, used all over the world and can be used to buy your food, drinks, real estate, cars and other things.

Why is Bitcoin so important?

Bitcoin does not suffer from things like government control and fluctuations in foreign currency. Bitcoin (you) protects the whole faith of the individual and is strictly equal.

This means that when anyone makes transactions with Bitcoin, the first thing they realize is that it is much cheaper to use it than to try to send money from one bank to another or use any other service that requires sending and receiving money internationally.

For example, suppose if I wanted to send money to China or Japan I would have to pay a fee from a bank and it would take hours or days for that fee to get that money there.

If I use Bitcoin, I can easily do it from my wallet or mobile phone or computer immediately without having one of these fees. For example if I wanted to send gold and silver it would take a lot of guards, it would take a lot of time and a lot of money to move the lingo from one point to another. Bitcoin can do it again with the touch of a finger.

Why do people want to use Bitcoin?

The main reason is because Bitcoin is a response to these destabilized governments and situations where money is not as valuable as before. The money we have now; the paper money in our wallets is worthless and will be worth even less a year from now.

We have also seen large companies showing interest in blockchain technology. A few weeks ago, a survey was conducted of a few Amazon customers as to whether they would be interested in using a cryptocurrency if Amazon was created. The results of this showed that many were interested. Starbucks also suggested the use of a mobile blockchain app. Walmart has also applied for a patent for a “smart package” that will use blockchain technology to track and authenticate packages.

We’ve seen a lot of changes in our lives from the way we shop, the way we watch movies, the way we listen to music, the way we read books, the way we buy cars, the way we look at houses, the way we spend money now, and the way we bank. The cryptocurrency is there to stay. If you haven’t already, it’s time for anyone to fully explore cryptocurrency and learn how to take advantage of this trend that will continue to grow over time.

E-Currencies and Money Part 3 – Money, Investment, Payment System, Or All of the Above?

Wikipedia defines money by its use as “a medium of exchange, a unit of account, and a store of value.”

Currency is but one form of money, and fits in the first category of this definition. Currency is also the smallest component of what economists define as the “money supply.” The money supply includes different components such as credit, deposit accounts, and the like.

Since virtually all e-currencies are used as units of value in exchange for goods and services, virtually all of them qualify as money and as currency. I further am of the opinion that Visa(tm) and MasterCard(tm) dollar units are also currencies, though the companies don’t like you to think of it this way (this view may be controversial to some). In fact, credit card accounts are the most widely used e-currencies in circulation today. I will go further and state that the distinction between currency and e-currency is, in fact, virtually zero in today’s electronic world.

The more interesting distinction is between government-issued (call them “public”) currencies and those that are issued by private companies (call them “private”).

With the introduction and widespread adoption of PayPal, private (e-)currencies suddenly became a hot topic. PayPal was one of the first private currencies tied neither to a government nor to a credit card issuer. But, private currencies are certainly nothing new. The original currencies in existence in the United States were in fact privately issued “Bank Notes” issued by banks in the US. They served a very important purpose in the early days of this country, since they had value independent of whether the US continued to exist as an independent country. (Go visit a coin shop and you can see some of these interesting documents.)

The original US bank notes were generally backed by a precious metal – in fact, they were often gold or silver certificates that could be exchanged for the precious metal at the bank if you wished. A bank account was a stash of gold for which you were given certificates. The US government later issued their own currency, and these were also gold or silver certificates. Those days didn’t end until 1972, when the US “went off the gold standard” which pegged the value of a US dollar to a certain amount of gold. Up until that time, the US government was required to back up the value of its money with gold held in depository facilities around the country. Fort Knox is the most well-known of these facilities, but by no means is it the largest.

It is in this context that we must look at the private e-currencies in circulation today.

All currencies are backed by something which establishes its value. The easiest to understand are gold-backed currencies. The units of value of such a currency is tied to some amount of gold held in reserve someplace “safe.” You can in fact still purchase gold certificates, just not from very many governments. Usually they are issued by gold-mining related companies who will issue a certificate to represent ownership of gold held in their vaults (“paper gold”). Make it a bearer certificate, and it’s pretty much gold-backed paper money.

The next easiest to understand is a currency-backed currency (such as PayPal is). For example, some smaller countries issue their own currencies at a fixed rate in relation to the US Dollars it holds in its own reserve. These are dollar-backed public currencies. There is no shortage of dollar-backed private currencies – one of the first was the traveler’s check. Merchants accept these pieces of paper because there is a well-financed, trust-worthy company who will accept that paper in exchange for US Dollars. Visa, MasterCard, and others also back their currency with US Dollars (and other currencies). Their units have value because merchants believe that they will (usually) receive a public currency in exchange for the units stored electronically in their accounts. Yet in reality, merchants value credit card units significantly less than the currencies that are held in their accounts. The reasons behind this are chargebacks and fees (as well as hassle factor). However, merchants are not permitted to charge consumers more due to their agreements with these credit card companies. As a result, even cash customers pay more for goods and services from these merchants (and why you should always demand a 2-3% discount when paying cash).

One mystery is why public currencies that are not backed by anything of value have value. These currencies are often called “fiat” currencies because people take them at face value based on confidence in the issuing government. But this is only part of the story. In reality, these currencies have value based on several factors. First, they are the only way to settle debts to the government (in most countries). Therefore if you owe taxes, you had better have some of these around. The second often overlooked component of value is the earning power of its population of people and corporations (more or less the current and future gross domestic product, or GDP, of that country). In fact, I would claim this is the most important factor when considered in combination with the monetary and other policies of the government in question.

To understand why, look at the global bond and bill market. The us government borrows billions and billions of dollars from investors and foreign governments every year. It must do this in order to finance its budgetary deficits, which of course include debt interest and principal payments. The US government enjoys a very low interest rate on its debt. The reason for this is a high level of confidence in the world that the US will repay that debt very reliably and predictably. Why does the world have such confidence in the US government? Because of its ability to collect taxes from its citizenry!

If the US government suddenly repealed all of its taxes, the value of the dollar would plummet as investors lost confidence in dollar debts owed by the US government. If the US government suddenly raised taxes by say, 10,000%, the dollar would plummet as well, as the world of investors would realize that there was no longer any motivation for people to work to make money, and therefore the ability of the government to raise money through taxation would go down the toilet. If unemployment were to skyrocket, or corporate profits collapse, or both, the US dollar would similarly lose value.

On the other hand, if the US government drastically cut back on waste and unproductive spending, the value of the dollar would rise, because investors worldwide would see that the US government was even more able to pay its debts. (Rising dollar value means lower interest rates paid on bonds issued by the government, which leads to a lesser need to raise taxes, which leads to a rising dollar.) In short it is your earning potential and that of your children that sets the value of the dollar. The value of the US dollar is for all intents and purposes, tax-based.

You won’t hear this analysis directly, only indirectly in the media. It’s a scary reality that the US government has complete control over the value of your savings, and the right to effectively steal from you (take value away without your permission). It’s also a pretty negative way of describing things, true as it is. Instead you will hear about factors that underlie or correlate with the ability of the government to raise taxes to pay its debts. As an example, “consumer confidence” is a predictor of how much junk we will buy this year, incurring sales taxes and leading to corporate profits, leading to more tax revenue. It may seem strange that this is more important than a rise in wages for the common worker. Why? Several reasons. Higher salaries may reduce corporate profits, and lower the government’s tax base. And, higher wages may not result in higher spending, it depends on how secure consumers feel, or whether they feel the need to save for retirement or a rainy day. It’s all about the taxes in reality.

Contrast this complex situation with the simplicity of an asset-backed currency, and you might wonder why anyone bothers with tax-based (a.k.a. fiat) currencies for commerce. The simple answer is that public fiat currencies allow the government a monstrous degree of control over its economy and ultimately its citizenry. If the government were to suddenly announce that everyone’s salary was to be cut by 50%, or that everyone had to give up half their savings to pay down the national debt, there would be a revolt (one would hope). Its far easier to simply “print more money” by raising taxes (but not too much), borrow more from the public markets against the earning power of future generations, etc. These are all things that ultimately reduce the value per unit of the money we all receive, but so far, no riots. But I digress….

Before putting you to sleep any further, let’s jump to the concept of private, asset-backed currencies. It should be clear at this point that a private currency backed by the US dollar is not much different than a US dollar. It might be more or less valuable than a US dollar in its purchasing power however. Consumers (should) love to use credit cards and value their credit lines more than money, because of the protection they get from fraud, and the flexibility to choose to be stupid and delay payment at exorbitant rates. Merchants should value a credit card less because of the chance of not getting paid by a fraudulent consumer, but more because of the increase in sales by accepting a consumer-preferred means of purchase. Because many traveler check companies will still honor counterfeit or fraudulently passed checks (in certain circumstances), it was common for many years to find that you could buy more foreign currency using these than by using cash! E-currencies based on the US dollar have similar considerations in determining their value – what are the costs, benefits, and risks involved in using these versus the alternatives? For the consumer and for the merchant?

For legitimate merchants, the primary differentiating concern is this: “When I get paid, what are the chances of a chargeback? What are the assurances that this currency is not counterfeit?”

For typically unsophisticated consumers, primary differentiating concerns are these: “How broadly is this currency accepted in case I need to use it for a different purpose? What are the extra features of this currency? Do I have some degree of protection from merchant fraud? Does it have reward points?”

Concerns common to both include: “What fees do I have to pay to complete a transfer? How much does it cost to exchange this currency for another that I need? What is the exchange rate for this currency going to be over time in the future?” And, since the currency is privately issued, “What is the chance that my currency will suddenly lose some or all of its value because of fraud on the part of the issuer?”

However, there is one much more significant and overriding concern that has emerged, thanks to whom else, the US government. It is: “what is the likelihood that this currency will suddenly become worthless because the US Government goes after the issuer?” This is not a new concern, of course. Even a gold-backed public currency could quickly become worthless if that country suddenly came under attack, or the government of that country was exposed as corrupt. This is the nightmare scenario for any currency, especially if the attacker is the US government.

So we know that e-currencies, even those backed by dollars are a currency with different characteristics than the dollar. Is the act of exchanging public currency for e-currency an investment? The answer is….not inherently, no. It depends on the intention of the one purchasing the e-currency. In many cases, purchase of an e-currency is performed for the sole purpose of enabling an exchange with a counter-party. In this case, the e-currency, regardless of its backing value, is an investment (ignoring whatever rewards result from the exchange). An e-currency by itself is generally NOT an investment if it is backed by the same currency that the holder would hold anyway. Moving your US dollars from a bank to an e-currency for no particular reason does not constitute an investment. However, if a holder of an e-currency doesn’t normally hold the dollar for other purposes, it can be a wise investment whose return is tied to the change in exchange rates. The same is true for currencies backed by gold (unless you already held the gold). E-currencies do not yield interest or dividends in and of themselves for many good reasons. It is possible however, to invest using e-currencies. I will cover that topic in a later installment.

I will draw this installment in the series to a close with the following summary. E-currencies are money, and as a medium of exchange of value, are always tied to a payment system of some kind. As privately issued currencies, they have different risks than public currencies, as well as different value-adds. Exchanging public currency for private currency is not inherently an investment, though the purpose of making the exchange may enable an investment. While many features of a private currency may add to or reduce the value of a currency, no other factor has more impact on the value of a private currency than the risk of it becoming suddenly valueless. The two primary potential causes for an e-currency losing its value are fraud by its issuer, or the issuer coming under attack, threatening the ability of holders of the currency to conduct commerce, perform exchanges, or access their funds. For this author, it is a sad statement that the two most likely attackers of a currency are the US government and cyber-terrorists who have an interest in reducing the value of an e-currency (e.g. competitor currencies, disgruntled individuals).

In the next article, I will cover why the current hostile US government posture with respect to e-currencies is both a) a very real concern, and b) perhaps the second biggest strategic blunder ever made by the US government. (Ok, well at least its in the top 10. ) I will then go on to conclude that this won’t change the future importance of e-currencies.

Stay Tuned!