Peeping into Cryptocurrencies

Recording my humble insights on cryptocurrency on the evening of March 29, 2023:

The Difference Between Cryptocurrency and Fiat Currency#

Cryptocurrency is a form of currency, while fiat currency (such as the Chinese yuan, US dollar, etc.) is only a liability of central banks, with its value conferred by law.

Currency has five major functions: 1. Unit of value; 2. Medium of exchange; 3. Store of value; 4. Means of payment; 5. World currency. These are its inherent characteristics, not subject to human will. Before the digital age, currency was primarily gold and silver.

On the other hand, the liability of central banks (fiat currency) is only legally defined as a "means of payment," with other functions being extensions of its payment function. Since its value is conferred by law, and law is made by humans, this means its actual value can be artificially changed (or even directly discredited, like the Gold Yuan). It can be imagined that something (fiat currency) whose value can be arbitrarily changed by humans cannot possibly have the function of "store of value" due to its artificially unstable value (such as the continuous "mild inflation" deliberately orchestrated by the government during peacetime, which constantly steals your wealth, and the excessive issuance during times of crisis that directly reduces the wealth held by the masses). Additionally, the fact that some countries implement foreign exchange controls directly limits the global currency function of fiat currency.

About Fiat Currency#

Fiat currency requires collateral, which is why it is said to be a liability of central banks (collateral is the asset side, while fiat currency is the liability side, with collateral and fiat currency being at the two ends of the central bank's balance sheet; interesting fact: currently, about two-thirds of the asset side of the People's Bank of China consists of US dollars). On the other hand, currency, due to its intrinsic value, does not require collateral corresponding to its value. In other words, currency itself is collateral for its own value. For example, the reserve asset gold held by various countries is already an asset and does not require further collateral. As a currency, gold has its intrinsic value.

About Gold#

Gold is a scam, and this scam has been going on for thousands of years.

A Piece of News About a Certain Fiat Currency#

On November 3, 1985, the Burmese government suddenly announced that the 25 kyat, 50 kyat, and 100 kyat banknotes were no longer legal tender. The people had no opportunity to exchange their banknotes, and their lifelong savings instantly became piles of worthless paper.

To replace the defunct currency, the government issued new 75 kyat banknotes, claiming to commemorate General Ne Win's 75th birthday. In August 1986, the government also issued 15 kyat and 35 kyat banknotes. It is rumored that Ne Win was superstitious about numbers and believed that 15 and 35 were lucky numbers. But for the people, it was anything but lucky. On September 5, 1987, the government suddenly ordered that all 35 kyat and 75 kyat banknotes were no longer legal tender.

Also, infamous examples include the Zimbabwean dollar, among others.

A Video Reference#

Wishing you good fortune.

Not your KEY, not your crypto.

NOTE: This content is a bit messy, as it is a compilation of thoughts from different periods. Try to grasp the main idea.

Ownership of this post data is guaranteed by blockchain and smart contracts to the creator alone.