Electronic payment systems are certainly a threat to cash. We're seeing more point of sales refuse cash and insist on credit or debit transactions. Cryptocurrencies may ride along on this transition, but they're not driving it. The cost of handling cash is one many businesses would love to get rid of.
For illegal transactions, cash is still more anonymous than cryptocurrencies. A distributed public ledger lends itself to traffic analysis that is much more difficult in the physical world. Cash is also more convenient for fast face-to-face transactions. While it's certain that drug purchases have occurred using cryptocurrency, the vast majority of illegal trades continue to use cash.
Fiat currencies aren't going away either. (And we could argue that many cryptocurrencies are actually fiat currencies, or at least fiduciary money, because they lack use value.) Governments require taxes to be paid denominated in their own currencies, even if some have experimented with accepting payment in Bitcoin. Many governments, like the U.S., require banks to hold accounts at a central bank, denominated in fiat currency., and to hold securities denominated in their account currency. Government benefit programs, employees, and contractors are paid in fiat currency, which constitutes a large percentage of the economy of any modern state.
Until governments permit banking entirely in cryptocurrency terms, cryptocurrency will continue to be a sideline to the "real" economy. Banking provides a lot of needed services, including creation of money through lending, not just payment processing or foreign exchange.
Fiat currency also permits governments to be a lender or buyer of last resort. While this is politically controversial, we should note that even governments that tried to keep on the gold standard abandoned it in times of crisis. Many economists see this ability as a positive, not a flaw. A government run on cryptocurrency might well re-issue fiat currency as soon as spending was needed in a war or financial crisis, just as governments debased metal-backed currency under stress.
In a way yes. It is not going to replace the cash as we know it but overtime it could. The biggest threat is to banks. The reason I say that is currently if we want foreign currency we have to go through all the legal hoops to obtain it at an increased fee. The banks make a fortune from this currently.
In the future or even now we can take crypto currencies in our digital wallet and there is no need to worry the banks. There are bitcoin ATM's around now that we can convert coins to cash.
Governments feel threatened as they are going to miss out on taxes and can't control your crypto. more and more people are switching to this to keep it away from the tax man.
No, because to 90% of the population it is seen as nothing more than geek currency or used to fund drugs or terrorists. Banks dont accept it, stores don't. You can't walk into a department store and over crypto.
It's not "real" (ie physical) to most of the world so they don't "believe" in or trust it.
Crypto is something you need when your computer gets ransomware. It's something that criminals use but "normal" people don't
Governments treat is as a disease unless they can tax or confiscate it.
It gets hacked more than paper money.
The media continues to perpetuate these beliefs and does nothing to assist in adoption or to convince people that crypto is real and useful
Until the perception of crypto changes that it is for the masses, is safe, quick, and easy to use and understand as pulling out cash or credit card, it will never be a threat to FIAT no matter how much the crypto world wants to believe it will be,
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Home / detikNews / Opinion
Monday 12 April 2010, 18:29 WIB
Fiat Money and the Threat of Economic Stability
- Detik news
Fiat Money and the Threat of Economic Stability
Jakarta - The issue of using fiat money as an unstable currency is undeniable. Fiat money, better known as banknotes, has actually provided "shares" to the economic instability of a country and even the world continuously and is destructive. The fundamental reason for fiat money instability is because naturally it is not stable.
This is because fiat is unbacked money which is forced to be used because of legal protection and "coercion" from the state. As a consequence, the state has a role and responsibility in maintaining the availability of its supply so that it can meet the existing demand.
Indirectly this gives an indication that fiat money's stability depends on how strong and to what extent a country is able to maintain its economy strongly and withstand various shocks both internally and externally.
Unfortunately, the state cannot always guarantee fiat stability because it is indeed an unstable character. Therefore the central bank wherever it is formed has the sole purpose (main). To maintain price stability (inflation) and exchange rate stability.
Why Stability <\ / strong>
Every economy always craves conditions where full employment conditions can be achieved. In economic theory this condition is illustrated by conditions where the unemployment rate can be kept to a minimum as possible accompanied by a normal inflation rate. Thus monetary and fiscal policies which are representations of economic policies are actually directed so that the economy can provide welfare and improve human living standards. Not the opposite.
However, why do these two policies always give negative results to the economy? Suppose the government issues a fiscal deficit policy in order to stimulate an economy that is undergoing a recession, as in the global case of the 2007 crisis where the Indonesian government issued bailout funds to Rp 7.2 billion for reasons of economic rescue.
However, the effect of the policy is not to provide a significant increase in output and to impress high economic costs. Based on data from the International Financial Statistics (IFS) 2009, it was noted that the stimulus policy only increased national output by 6% and had raised interest rates by 35% (calculations between 2007-2008).
Logically, how could the real sector be excited if faced with such an interest rate? Thus it is reasonable if there is an assumption that 6% percent is not due to the development of the real sector. However, due to soaring financial sector activities. Again money is an issue supporting the development of a financial sector that is so great.
Then, how can economic stability be raised if every economic policy always gives the impression of instability? And, the conclusion of the results suggests that money is the main trigger for anomalies in every economic policy.
Character of Money (Fiat Money) <\ / strong>
Fiat money which is nothing but paper money and we always use it is actually a state debt to everyone who holds it. It's worthless and real always fluctuates following market turmoil. In various economic theories have been mentioned and proven that money in the long run is inflationary and unstable.
Furthermore, money will have a negative impact on output in the economy. Besides that money is very closely related to interest rate fluctuations where the upheaval at the interest rate will change the balance of money in the economy. The interest rate will have an impact on the current decline in the value of money compared to the future. So, indirectly by holding money, we have paid taxes to the state and in real terms our wealth will be reduced because of it.
That is why many people are competing to invest their money in non-financial economic assets just to save the value of their assets from reduced value and degraded by inflation. Thus the widespread use of fiat money has had a negative impact. Both in terms of macro economy and individually.
Then, how? <\ / strong>
Considering that fiat money has been used extensively and rooted in all economic sectors, it is not wise and appropriate if we reject and suppress its existence. What can be done in addressing the negative side of fiat is by reducing the side of instability by encouraging users
Not with the state of the art today.
Electronic payment systems are certainly a threat to cash. We're seeing more point of sales refuse cash and insist on credit or debit transactions. Cryptocurrencies may ride along on this transition, but they're not driving it. The cost of handling cash is one many businesses would love to get rid of.
For illegal transactions, cash is still more anonymous than cryptocurrencies. A distributed public ledger lends itself to traffic analysis that is much more difficult in the physical world. Cash is also more convenient for fast face-to-face transactions. While it's certain that drug purchases have occurred using cryptocurrency, the vast majority of illegal trades continue to use cash.
Fiat currencies aren't going away either. (And we could argue that many cryptocurrencies are actually fiat currencies, or at least fiduciary money, because they lack use value.) Governments require taxes to be paid denominated in their own currencies, even if some have experimented with accepting payment in Bitcoin. Many governments, like the U.S., require banks to hold accounts at a central bank, denominated in fiat currency., and to hold securities denominated in their account currency. Government benefit programs, employees, and contractors are paid in fiat currency, which constitutes a large percentage of the economy of any modern state.
Until governments permit banking entirely in cryptocurrency terms, cryptocurrency will continue to be a sideline to the "real" economy. Banking provides a lot of needed services, including creation of money through lending, not just payment processing or foreign exchange.
Fiat currency also permits governments to be a lender or buyer of last resort. While this is politically controversial, we should note that even governments that tried to keep on the gold standard abandoned it in times of crisis. Many economists see this ability as a positive, not a flaw. A government run on cryptocurrency might well re-issue fiat currency as soon as spending was needed in a war or financial crisis, just as governments debased metal-backed currency under stress.
In a way yes. It is not going to replace the cash as we know it but overtime it could. The biggest threat is to banks. The reason I say that is currently if we want foreign currency we have to go through all the legal hoops to obtain it at an increased fee. The banks make a fortune from this currently.
In the future or even now we can take crypto currencies in our digital wallet and there is no need to worry the banks. There are bitcoin ATM's around now that we can convert coins to cash.
Governments feel threatened as they are going to miss out on taxes and can't control your crypto. more and more people are switching to this to keep it away from the tax man.
No, because to 90% of the population it is seen as nothing more than geek currency or used to fund drugs or terrorists. Banks dont accept it, stores don't. You can't walk into a department store and over crypto.
It's not "real" (ie physical) to most of the world so they don't "believe" in or trust it.
Crypto is something you need when your computer gets ransomware. It's something that criminals use but "normal" people don't
Governments treat is as a disease unless they can tax or confiscate it.
It gets hacked more than paper money.
The media continues to perpetuate these beliefs and does nothing to assist in adoption or to convince people that crypto is real and useful
Until the perception of crypto changes that it is for the masses, is safe, quick, and easy to use and understand as pulling out cash or credit card, it will never be a threat to FIAT no matter how much the crypto world wants to believe it will be,
Detik news
Home Borders Regional News East Java International Blunt Column Focus Hoax Or Not Photo Most Popular Pro Cons Infographic Reader Voice Secondary Videos Index Election
Home / detikNews / Opinion
Monday 12 April 2010, 18:29 WIB
Fiat Money and the Threat of Economic Stability
- Detik news
Fiat Money and the Threat of Economic Stability
Jakarta - The issue of using fiat money as an unstable currency is undeniable. Fiat money, better known as banknotes, has actually provided "shares" to the economic instability of a country and even the world continuously and is destructive. The fundamental reason for fiat money instability is because naturally it is not stable.
This is because fiat is unbacked money which is forced to be used because of legal protection and "coercion" from the state. As a consequence, the state has a role and responsibility in maintaining the availability of its supply so that it can meet the existing demand.
Indirectly this gives an indication that fiat money's stability depends on how strong and to what extent a country is able to maintain its economy strongly and withstand various shocks both internally and externally.
Unfortunately, the state cannot always guarantee fiat stability because it is indeed an unstable character. Therefore the central bank wherever it is formed has the sole purpose (main). To maintain price stability (inflation) and exchange rate stability.
Why Stability <\ / strong>
Every economy always craves conditions where full employment conditions can be achieved. In economic theory this condition is illustrated by conditions where the unemployment rate can be kept to a minimum as possible accompanied by a normal inflation rate. Thus monetary and fiscal policies which are representations of economic policies are actually directed so that the economy can provide welfare and improve human living standards. Not the opposite.
However, why do these two policies always give negative results to the economy? Suppose the government issues a fiscal deficit policy in order to stimulate an economy that is undergoing a recession, as in the global case of the 2007 crisis where the Indonesian government issued bailout funds to Rp 7.2 billion for reasons of economic rescue.
However, the effect of the policy is not to provide a significant increase in output and to impress high economic costs. Based on data from the International Financial Statistics (IFS) 2009, it was noted that the stimulus policy only increased national output by 6% and had raised interest rates by 35% (calculations between 2007-2008).
Logically, how could the real sector be excited if faced with such an interest rate? Thus it is reasonable if there is an assumption that 6% percent is not due to the development of the real sector. However, due to soaring financial sector activities. Again money is an issue supporting the development of a financial sector that is so great.
Then, how can economic stability be raised if every economic policy always gives the impression of instability? And, the conclusion of the results suggests that money is the main trigger for anomalies in every economic policy.
Character of Money (Fiat Money) <\ / strong>
Fiat money which is nothing but paper money and we always use it is actually a state debt to everyone who holds it. It's worthless and real always fluctuates following market turmoil. In various economic theories have been mentioned and proven that money in the long run is inflationary and unstable.
Furthermore, money will have a negative impact on output in the economy. Besides that money is very closely related to interest rate fluctuations where the upheaval at the interest rate will change the balance of money in the economy. The interest rate will have an impact on the current decline in the value of money compared to the future. So, indirectly by holding money, we have paid taxes to the state and in real terms our wealth will be reduced because of it.
That is why many people are competing to invest their money in non-financial economic assets just to save the value of their assets from reduced value and degraded by inflation. Thus the widespread use of fiat money has had a negative impact. Both in terms of macro economy and individually.
Then, how? <\ / strong>
Considering that fiat money has been used extensively and rooted in all economic sectors, it is not wise and appropriate if we reject and suppress its existence. What can be done in addressing the negative side of fiat is by reducing the side of instability by encouraging users