Imagine a world without money- it’s hard to fathom. Since the beginning of civilization, we have lived with cash or alternative forms of it. However, cash and modern fiat currencies, such as the US Dollar and the British Pound, all have a fundamental flaw. They are completely based on trust.
While trust works well in strong, stable economies, a substantial part of the world is composed of developing countries with less stable economies.
When a corrupt government is running out of money, it’s tempting for them to print more. However, printing money decreases the value of the currency.
Simply put: when the supply of the currency increases, the value is reduced.
Even worse, hyperinflation can set in, causing the currency to become worthless.
Citizens over credulously trust their government to be responsible and not fabricate more.Even in developed nations, we still rely on trust. When you send and receive currencies electronically, you are forced to trust banking institutions to store records of the transactions. The banks save a digital number (the individual’s remaining account balance) and informs the receiving bank of the amount of funds transferred from the initial account. The margin for error, malfeasance, fraud, and unscrupulous behavior by these institutions is immense. Yet, we are expected to have the disposition of believing they possess an infallible system and moral compass.
