THE BEST CURRENCY - NO ONE ON THE PLANET USES

What makes the perfect currency?..

Gold,Crypto,fiat?... none of these are the perfect store of values. However there is one thing that fits all of the requirements that no one uses.

I watched a ReasonTV debate last night on YouTube. It’s was entitled “WILL CRYPTO CURRENCY OR SIMILAR REPLACE FIAT AS THE PREFERRED MEANS OF EXCHANGE”. Debating the case for crypto was CEO of the shapeshifter exchange, Erik Voorhees. Arguing for fiat, was Peter Schiff, the CEO of Global Pacific Capital.

One thing that they both agreed on was the fact that fiat currency as we know it, was dead in the water. For the past 50 years the dollar has not been backed by gold. It’s value overinflated, and has no intrinsic value.

The argument against crypto was that it too had no intrinsic value, was backed by nothing and could be superseded at any moment. These are charges that seem fair on the face of it. His reasoning was that traditionally fiat currencies had been backed by gold. Gold has a genuine use case in the world. Besides jewellery, it has properties not possessed by any other metal, that make it perfect for electronics or dentistry. This is the intrinsic value of gold.

So, is there an intrinsic value to cryptocurrency? While it’s true that you can not build anything with mathematics, a lot of effort has gone into the security that it brings. Cryptocurrency is counterfeit proof, can be transferred around the world in seconds, and be very smart. This without doubt has value.

The question of intrinsic value is a fascinating one. Most investors that buy gold do so with the aim of keeping it until its scarcity makes it more valuable. However, if a new abundant material was discovered with the same intrinsic value as gold, would it loose all credibility as a store of value. I would say no.

The intrinsic value of gold is not the reason it is valued. It’s scarcity and tradition give it a place in our society. It’s intrinsic use is not the reason it is a store of wealth. The thing that makes gold a feasible store of value is it’s scarcity, and difficulty to get more from the earth.

The effort it takes to mine gold, along with its limited known amount make it a viable currency.

This is a property that most cryptocurrency’s possess.

However there is something else on earth that has intrinsic value, and a finite amount but can never be destroyed. This could be the ideal currency. I’m talking about energy.

From my school days I remember our physics classes. It was taught that energy can neither be destroyed or created. When ever energy was used it was just transferred into another form of energy. For example :- a battery stores chemical energy. When it is put into a torch it converts it to light energy, and maybe a small amount of heat energy. The light energy could help a plant grow and that would be converted back into chemical energy etc.

As a currency energy seems like the holy grail. It has intrinsic value, it is finite and never be destroyed.

It seems that it is the ideal base currency for the world. Coins that use ‘proof of work’ algorithms convert enormous amounts of energy to process payments. The energy is the utility token needed to create it, and then transferred to electrical and heat energy, as that reacts with its environment to to transform into other energies.

The question is, how does someone go about tokenising something that dissipates into its surroundings?. I’m not talking about coins such as powerledger that simply slow electrify to be traded I coin form. I’m suggesting that if energy in all of its forms could be calculated and tokenised we would have the ideal base currency for the world.

It’s a daunting proposition, perhaps impossible.

But when it comes to a finite intrinsically valuable entity, energy is king.

I’d be interested in comments.