A Finite Currency for Finite Resources

Itʼs no secret that paper dollars in themselves are utterly useless; that’s how fiat money works. Theyʼre only a symbol of the resources and materials which can be bought with them, valuable because the government has deemed them as such. And we canʼt really be sure of how many of them are out there. But if more money can be printed every time the market slows down, how can there ever be enough material resources to keep up with the endless supply of dollars?

Fiat money is not backed by anything solid like silver or gold, and must be declared legal tender by the government. It has been the platform for all reserved currencies since 1971, and is what we currently use; despite the fact that every fiat currency in recorded history has ultimately failed.

Our current economy is strengthened by spending. When the economy is suffering, the go-to solution seems to be getting people to spend more. Economy has been at its strongest during war, which causes destruction and uses a ton of resources, but creates jobs and promotes major spending. Even if everyone wanted to be more concerned about conserving resources, we couldnʼt afford to. We canʼt let production or consumerism slow down without businesses and ultimately the economy suffering. And so we must keep producing, using resources, and getting consumers to buy things that they donʼt necessarily need so they can later throw them away and buy more.

The official definition of economy is thrifty management and saving, frugality in the expenditure or consumption of money and resources. So in many ways, an economy which forces unnecessary spending and wasting of resources isnʼt an economy at all; but quite the opposite.

There are more and more canaries in the coal mine getting prepared for an inevitable economic collapse, speaking out and buying up gold and silver. And certainly, gold and silver will always have value, and it might be smart to have some in case thereʼs an epic collapse of economy and technology. However, if this crash isnʼt so apocalyptic that the entire grid and internet shuts down, silver and gold simply arenʼt practical currencies in a technological world. They canʼt be exchanged wirelessly. So if people begin wirelessly exchanging symbols for amounts of silver and gold, all that silver and gold will need to be held somewhere it can still be withdrawn by the recipient. This brings us back to banks, which ultimately leads to a fiat currency, once the banks start writing more notes than they have silver and gold.

Cryptocurrencies like Bitcoin have received a lot of criticism, but have nevertheless skyrocketed in value and are now beginning to gain a serious following. They are not controlled or monitored by the government, and have a set amount that will eventually be reached, at which point no more can be made. They are finite currencies, just as silver and gold are finite resources. But unlike silver and gold, cryptocurrencies can be conveniently exchanged wirelessly, and without being a symbol for anything physical that needs to be stored somewhere.

Similarly to fiat currency, Bitcoins are only valuable because people have deemed them to be. The currency itself has no intrinsic value, as it is not made of any physical material. However, because there is a finite amount and the value is set by the people who use it rather than the government that issues it, it is more similar to gold in the way its spenders think of it.

We live in a world of finite resources, and despite the warnings weʼve all heard about running out of rather important things like fossil fuels and water, most people and businesses arenʼt changing their habits nearly as much as they probably need to. No matter how many facts and numbers are thrown at us, itʼs difficult to actually believe. How could we ever run out? As long as we have money to spend at the store, the things we need will be there for us to spend it on.

Money is everywhere. It keeps getting printed, so thereʼs absolutely no way of knowing how much there actually is. It just seems endless. With a seemingly infinite currency, the materials which it buys and symbolizes can also seem infinite.

Now with a finite currency like Bitcoin, everybody knows exactly how many Bitcoins there are and that there wonʼt ever be any more. And since a certain number are bound to eventually get lost or destroyed, itʼs understood that once all the Bitcoins are in circulation, the total number available can only ever go down. Suddenly, the currency seems more valuable and people start to treat it as such. The finite materials they buy are actually being represented by a finite currency. Could this cause people to be less wasteful and more frugal with what they spend their money on? Could it change our very definition of what a healthy economy is?

And a currency that puts the power and complete knowledge of how it works and how many there are into the hands of its spenders, rather than a government, could give people a real sense of responsibility and inspire them to take the economy into their own hands rather than relying on government.

Of course finite currencies like Bitcoin also naturally present new problems, the foremost being deflation and unemployment. As the value of a slowly dwindling currency gets higher, each coin becoming worth more and more, prices will gradually go down. But because digital currencies are divisible into, for example, one hundred millionth of a bitcoin, they can be broken down into smaller increments as prices get lower. So even if there were only a few Bitcoins left, it could still be enough for everyone.

Many cryptocurrency critics seem to overlook the fact that if this did become our standard currency, deflation and other potential problems would be known and understood by the public. Give us some credit, we can develop ways to overcome these obstacles. If everyone is aware that the value of the currency is bound to go up, systems can be put in place to ensure that loans taken out arenʼt impossible to pay back years later. For example, loans could be set to deflate at the same rate the currency deflates. If we’re aware that production and consumption will go down, we can be prepared for fewer work hours. A new type of currency obviously wouldn’t work with the exact same infrastructure that was developed for fiat dollars, adjustments would have to be made.

Bitcoin in particular may not become the standard currency, but if a finite and decentralized digital currency or number of digital currencies were to become the standard, it could correct the misguided idea of what an economy should be in the United States and inspire individuals to consume more responsibly. By slowing down production, it could actually allow us to start reversing some of the damage weʼve caused to the planet and replenishing the resources weʼve drained.

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