The first prototypes of the modern central banking system were the Bank of England and the Swedish Riksbank in the 17th century. The Bank of England was the first to acknowledge the role of lender of last resort.
Before the rise of central banks, the world was dominated by unified currency blocs, such as the sterling bloc. There were only 18 central banks in the world in 1900. This number more than doubled to 40 by 1940. As of May 2017, there were 168 central banks in the world.
It is important to note that most of the world’s central banks issue half-baked local currencies, meaning, currencies that are not well supported by productivity and are, therefore, subjected to continuous depreciations and devaluations in the hands of corrupt and/or incompetent governments.
Vulnerable countries should do away with their central banks and domestic currencies and replace them with a sound foreign currency such as the Euro or US dollar.
Panama, Ecuador, and El Salvador are prime examples of countries that have benefited from officially eliminating their domestic currencies and adopting the US dollar. Montenegro and Kosovo are examples of eurosation.
Benefits From Officially Eliminating A Weak Domestic Currency & Adopting A Strong Currency
- Economic stability, given by a sense of security knowing as a matter of fact that the strong currency will not be subjected to devaluations or depreciations as is the case with domestic currencies which are usually manipulated by government officials based mostly on political and powerful individual vested interests over the common good.
- Much stronger purchasing power, again thanks to the stability of the value of the strong currency thus keeping inflation in check.
- Increased foreign direct investment.
- Reduction in the real interest rates and volatility.
One cost is the loss of seigniorage revenue.
Although the benefits of official dollarization or eurosation outweigh the costs hands down, the main reason stopping their massive adoption has been political. Most politicians put their individual interests over the common good.
Advantages of Cryptocurrency over Fiat Money
1) Cryptocurrency Transactions Are Inexpensive
A typical credit card transaction has 5 parties involved: consumer, merchant, issuer, acquirer, and the switch. A cryptocurrency payment is free or nearly so.
2) Cryptocurrency Transactions Are Irreversible
There is no possibility of a chargeback for that transaction for it has been now and forever recorded on a decentralized accounting ledger called a Blockchain within a network of computers around the world. Since there is no central authority, the transaction cannot be overturned.
3) Cryptocurrency Payments Are Decentralized
The transaction takes place in a decentralized accounting ledger, with no banks or middlemen involved.
4)Cryptocurrency Transactions Are Secure & Anonymous
Fiat or paper money can be counterfeit. There is no possibility to counterfeit a cryptocurrency. Cryptocurrencies use cryptographic protocols — extremely complex code systems — to protect sensitive data transfers.
5) Cryptocurrencies Are Liquid
You can easily sell them for US Dollars or whatever fiat currency you chose, as long as it is supported by the exchange you are using.
6) Cryptocurrencies Are Finite
The supply of any fiat currency can change at the whim of the government that issues it. Whereas, with a cryptocurrency, there is a finite supply built into its code.
The relatively passive scenario of fiat money will soon be changed (within two decades) by the unstoppable power of open-source, transparent, decentralized currencies, and frictionless business through crypto-environments, backed by cryptography and blockchain technology.
Cryptocurrencies are the Precursors of a Truly Global Financial System!
JC Wandemberg Ph.D.
President & Founder
About the author: Dr. Wandemberg is an international consultant and stocks trader, keynote speaker, published author, professor, and analyst of economic, environmental, social, managerial, marketing, and political issues. For the past 30 years Dr. Wandemberg has collaborated with corporations, communities, and organizations to integrate sustainability through self-transformation processes and Open Systems Design Principles, thus, catalyzing a Culture of Trust, Transparency, and Integrity.