It is also important to point out that the crypto-economy involves many competing currencies, so we are dealing with a fundamentally different beast than national economies that rely on a single currency. Because anyone is free to print their own money in the crypto-economy, it is vital that the base currencies be deflationary.
In fiat systems, you want a small amount of inflation to encourage lending and discourage loan defaults. When banks lend money, they do so by "printing" new money into existence. What prevents the system from spiraling into hyper-inflation is that money is destroyed when people repay their debts. Because there is always more debt in existence than money (since debt = money + interest) there has to be a constant rate of inflation to allow there to always be enough money to repay the debts.
In the crypto-economy, by contrast, new money is printed into existence without usually having a way of being destroyed. This problem is obviated by the fact that new money usually comes in the form of new types of currencies, it isn't a printing of existing currencies. If someone wishes to print new money, for instance, they must create a new token, give it a new name, and sell it (e.g., through an ICO). The money supply of existing currencies isn't being affected by the expansion of the money supply in the crypto-economy.
What this means is that the crypto-economy itself must discourage over-exuberance since there is no risk involved in creating one's own currency. That discouragement comes from the fact that established currencies are deflationary, and therefore new projects must be able to prove that they can outperform existing platforms. Because the crypto-economy is a competitive free-market, competition between currencies makes it so that monetary policy from a single institution aimed at artificially recreating the conditions of a free market is not required.
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STOPIt is also important to point out that the crypto-economy involves many competing currencies, so we are dealing with a fundamentally different beast than national economies that rely on a single currency. Because anyone is free to print their own money in the crypto-economy, it is vital that the base currencies be deflationary.
In fiat systems, you want a small amount of inflation to encourage lending and discourage loan defaults. When banks lend money, they do so by "printing" new money into existence. What prevents the system from spiraling into hyper-inflation is that money is destroyed when people repay their debts. Because there is always more debt in existence than money (since debt = money + interest) there has to be a constant rate of inflation to allow there to always be enough money to repay the debts.
In the crypto-economy, by contrast, new money is printed into existence without usually having a way of being destroyed. This problem is obviated by the fact that new money usually comes in the form of new types of currencies, it isn't a printing of existing currencies. If someone wishes to print new money, for instance, they must create a new token, give it a new name, and sell it (e.g., through an ICO). The money supply of existing currencies isn't being affected by the expansion of the money supply in the crypto-economy.
What this means is that the crypto-economy itself must discourage over-exuberance since there is no risk involved in creating one's own currency. That discouragement comes from the fact that established currencies are deflationary, and therefore new projects must be able to prove that they can outperform existing platforms. Because the crypto-economy is a competitive free-market, competition between currencies makes it so that monetary policy from a single institution aimed at artificially recreating the conditions of a free market is not required.
damn, another one. i stil lfeel as this is all a game and china will eventually pull a aprils fools
I wonder if they are just picking a few winners, all others get shuttered.
Disclaimer: I am just a bot trying to be helpful.
what is going on huhhh market totally in red due to china decision
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