Writing in his eponymous magazine, Steve Forbes explains to readers why cryptocurrencies cannot be “real” money, at least not the way they’re set up today. Forbes writes:
THE ASTONISHING FACT about the explosion in cryptocurrencies is that their creators have overlooked a fundamental fact: Money isn’t viable if it fluctuates in value, particularly with the wild swings characteristic of this sector. Most buyers are looking to make a quick buck, treating Bitcoin et al. like penny stocks of yore. They forget that the very instability of government-produced money is one of the two critical reasons cryptocurrencies were created in the first place (the other being privacy). If in 2013 you had taken out a mortgage for $250,000 in Bitcoin, you’d owe the bank roughly $18 million today.
Until one of these digital monies effectively ties itself to gold, a basket of commodities or a bundle of major currencies, it will never replace the flawed, traditional central bank currencies we’re currently stuck with. To be a true alternative, a cryptocurrency must also be easy to use for day-to-day transactions. Moreover, the supply can’t be artificially restricted. Fabricated scarcity doesn’t create value; utility and trustworthiness do. Look at the Swiss franc. Its supply is enormous. But because its long-term stability has been better by far than that of any other currency in the world over the past 100 years, people find it highly desirable.
Read more here.
