Even at the time when Bitcoin pierced the glass ceiling and its price was at an exorbitant level of 20 thousand dollars by today's standards, there were skeptics who constantly reproach digital gold that it is not secured and therefore cannot replace traditional fiat money.
This is a common misconception. First we need to understand what lies behind the concept of security. Providing money is something that creates and maintains their value. When the first paper money appeared, their value was determined by the value of gold. If gold, for whatever reason, were suddenly devalued, then the value of all the money backed by gold would have come to naught.
Foreign exchange security is the most popular provision of money, but it will be a big mistake to think that today fiat money, be it dollars, euros, yuan or rubles, is backed by gold, just like several centuries ago. Money supply is growing along with consumption, and it is simply impossible to provide all volumes of currency with gold, and there is no need for that.
The US has long ceased to provide its dollars with a gold reserve, and other powers followed. Let's see what the most popular fiat money and the cryptocurrency that have just appeared are provided at the moment.
Providing Fiat Money
A little more than a century ago, all dollars, like francs, marks and other world currencies, were provided with gold equivalent. In practice, this literally meant the following: you could come to the bank and ask them to exchange your paper money for gold.
With the development of global and transcontinental trade, tying money to gold became problematic: the exchange of dollars for gold in French banks, for example, required the delivery of precious metal from overseas, with serious risks. Gradually, the world banks came to realize that it is not necessary to assign a real gold equivalent to each bill.
Today, providing all world currencies is just a promise at the state level that everything will be in order with your money. However, the world economy knows hundreds of examples when a default or close to a default economic shocks literally destroyed the economy of even the largest and most stable states.
Dollars are printed by the Federal Reserve System of the United States in the quantity and with the frequency with which this requires the state of affairs in the economy. No consideration is given to their provision. The only thing that is secured by the dollar today is the demand for it, as well as US securities, which are in the possession of other countries. The situation is similar with the Russian ruble, whose exchange rate directly depends on the cost of oil on the world market.
Dollar popularity
The security of the currency can be not only gold or other material values. Security can be anything that adds value to a currency.
The worldwide recognition and spread of the dollar around the globe derives from US trade relations. In every corner of the world, people know that you can buy anything for dollars. This knowledge creates demand, and demand stimulates price growth. That is why the dollar is one of the most expensive world currencies.
In order for the BeeNode cryptocurrency for the digital economy to become analogous to the dollar in the real economy, the platform creators make every effort to popularize the cryptocurrency and create conditions for the coin to be accepted for payment in the maximum number of stores and services worldwide.
Securing BeeNode Coins
Fiat money, as we have already found out, has not been backed by solid gold or anything tangible for a long time. However, one should not consider them to be empty pieces of paper; behind popular currencies there is a powerful economy, securities, credit obligations and a host of other factors affecting the exchange rate.
With cryptocurrencies, the situation is almost identical: each cryptocurrency has a set of functionality that creates its value. In addition, there may be other factors behind the digital coin that guarantee a stable exchange rate of cryptocurrencies on exchanges.
Cryptocurrency BeeNode is a young but ambitious project that builds an entire infrastructure around a coin. The ecosystem of the exchange, trading platform, payment system and investment fund is the key to the demand for technologies that are used to create a new digital coin.
In addition to the constantly growing demand, and the demand can really grow constantly, because the market volumes are still very far from the ceiling, BeeNode will be strengthened on the stock exchanges by attracting miners and large investors to the blockchain.
Publication date 22.05.2019
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