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One World Currency

We’ll discuss the idea of “one world currency”, define it, look at financial implications of a universal currency and discuss how Bitcoin may be the answer. We’ll also make some predictions.

The Economist Magazine Article of 1988 and The Phoenix

On January 9, 1988, The Economist Magazine made a bold prediction regarding one world currency. They predicted that in the year 2018, 30 years into the future, a new international currency would be used by everyone. The new currency would be called the “Phoenix.”

“Thirty years from now, Americans, Japanese, Europeans, and people in many other rich countries, and some relatively poor ones will probably be paying for their shopping with the same currency. Prices will be quoted not in dollars, yen or D-marks but in, let’s say, the phoenix. The phoenix will be favoured by companies and shoppers because it will be more convenient than today’s national currencies, which by then will seem a quaint cause of much disruption to economic life in the last twentieth century.”

“Get Ready for the Phoenix” – The Economist Magazine – January 9, 1988, Vol. 306, pp 9-10

For perspective, the year was 1988 and people were scared. Americans were still feeling the effects of the Black Monday stock crash that occurred just a few months earlier. On October 19, 1987, the US Stock Market fell by approximately 22% in one day. As a result, the catastrophic market effects from Black Monday were felt around the world. It was a frightening event that exposed the volatility and vulnerability of financial markets.

One World Currency: What is it?

A currency or money that is trusted for its stability, ease of use and universal recognition is what one world currency embodies. One world currency could be used by everyone on the globe and would be independent of government oversight and political boundaries. Currently, the US Dollar is the de facto “one world currency” or world reserve currency. However, the paper US Dollar may be nearing the end of an era.

The US Dollar: World Reserve Currency

World Leaders Make the US Dollar the Reserve Currency for the World, Giving the United States a Big Advantage in Trade

After World War II, the United States Dollar became the official world reserve currency, much like one world currency. In 1944 at a meeting called “Bretton Woods”, world leaders agreed to make the US Dollar the reserve currency for the world. The impact of this change to global finance was significant and had long-lasting impacts on both US influence and power, as well as purchasing power outside the United States. A reserve currency is one where the central banks maintain a fixed exchange rate with a particular currency and their own currencies. In this case, the US Dollar was designated as the reserve currency. As a result, this change played a vital role in the financial stability and prosperity that Americans enjoyed in the latter 20th century.

As world reserve currency holder, the United States was required to redeem US Dollars for gold on demand by foreign powers. Additionally, after World War II, the United States was one of the largest holders of gold bullion in the world. As a result, world reserve currency status for the US Dollar seemed like a natural fit. Unfortunately, in 1971, deficit spending by the US and an excess of paper money caused countries to increase their demand for gold. In response, the US Dollar was removed from the gold standard and no longer linked to gold.

Fiat Currency

Currency That Is Not Backed or Supported by Anything is Fiat

First, it’s important to understand what fiat currency is and the difference between real money and fiat currency. For example, fiat currency is physical currency, such as paper dollars, that are issued by a government and not backed by an asset such as gold or silver.

Moreover, fiat currency is backed or supported by nothing more than a promise from the government that issued the currency. As a result, fiat currencies frequently fall prey to high inflation, devaluation and ultimately failure. They typically have no intrinsic value. Unfortunately, most modern currencies are fiat currencies. Therefore, it is unlikely that a fiat currency would be chosen to be one world currency.

Financial Implications of a Universal, One World Currency

The people who could benefit most from one world currency are the middle class and the poor. The current banking system creates barriers to obtaining, transferring and borrowing money that disproportionately affects those with little money. The banks are the middle man and the gate keepers to money. When the middleman banks are removed, individuals with less money can more easily transfer, borrow and use money without having to obtain permission. In addition, fees and costs associated with banking are significantly reduced or eliminated.

Additionally, a universal “one world currency” allows individuals to borrow and lend with ease from others. Small loans, often referred to as “micro loans” are growing in demand throughout the world for small businesses and individuals. On the other hand, there are those who are interested in participating as micro loan lenders. Finally, one world currency would allow the transfer of money and loans worldwide to those who qualify.

In undeveloped countries throughout the world, individuals who do not have a bank account or are not represented by a financial institution are the “unbanked.” For example, in India, there are approximately 190 million adults who do not have a bank account. Accordingly, creating a digital, one world currency with an electronic wallet solves the unbanked problem for millions of people worldwide.

“Globally, about 1.7 billion adults remain unbanked— without an account at a financial institution or through a mobile money provider. In 2014 that number was 2 billion.”

World Bank Statistics, 2020

Is Bitcoin the Answer to One World Currency?

Bitcoin operates on block chain technology that can be used anywhere in the world by anyone with a phone or computer. At its simplest form, the block chain is data stored on a public database. Likewise, the blocks of information include transaction data, participant data and distinguishing data. In addition, each block of data stores thousands of transactions under cryptographic lock and key. The block chain is operated as a network of computers. Accordingly, they make the network run and keep it secure by solving algorithmic hashes. The network computers earn cryptocurrency for their work.

Historically, political borders, banks and different currencies prevented or at least slowed global trade and exchange. However, with Bitcoin, no intermediary bank or government is required to conduct transactions. In addition, Bitcoin has a proven track record of 11 years of success and security. Despite some hacking issues that occurred early on, most users see Bitcoin as a safe and secure way to store and send money worldwide.

Cryptocurrency Definition

Cryptocurrency is a digital asset that can be traded or used as payment from person to person on the internet. The best cryptocurrency uses cryptography to secure transactions on a network. Namely, block chain technology is part of the method by which the network is made secure. Moreover, miners use powerful computers to solve advanced equations in order to earn Bitcoin or other cryptocurrencies. In turn, mining brings more security to the distributed ledger network, ensuring that transactions are completed and no one can cheat the system.

Bitcoin (BTC) Explained

The Cryptocurrency Bitcoin is a Peer-to-Peer Cryptocurrency Payment System That was Founded in January 2009 by Satoshi Nakamoto

Bitcoin is an open-source, block chain-based technology that was designed as a peer-to-peer payment system. It is designed to be a decentralized electronic payment method that can be conducted semi-anonymously among individuals. It is intended to be a digital cash. Equally important, the task of Bitcoin is to solve the double spend, trust problem that had been encountered in the past with electronic currencies.

Using block chain technology to maintain its functionality, Bitcoin miners contribute to the system. In order for users to send and receive bitcoin, the block chain depends on miners. Moreover, computers are used by miners to complete complex calculations which build blocks on the block chain. As a reward, the miners receive Bitcoin as payment when each block is completed.

Bitcoin was introduced to the world in January 2009. It is unknown who invented bitcoin; however, a developer named Satoshi Nakamoto (probably a pseudonym) released a 9-page white paper entitled, “Bitcoin: A Peer-to-Peer Electronic Cash System.” The Bitcoin white paper describes Bitcoin’s purpose and how it works.

Bitcoin Continues to Grow

There are a couple of things to understand about Bitcoin growth. First, Bitcoin is growing in popularity and use worldwide. Users are adopting Bitcoin as a store of value like gold and using it as a payment method in places where banks don’t exist. Second, Bitcoin is growing in price.

When users began mining Bitcoin on laptops in 2009, it had little value. Yet, today 1 Bitcoin can be exchanged for approximately $10,000! Around 2020, billions of Dollars of institutional money began to flow into Bitcoin investments.

Examples of Institutional Money Investments in Bitcoin:

There are many other known examples of institutional investors who have begun investing in Bitcoin.  

Future Predictions

It seems clear that in 2021, Bitcoin will begin its next phase of expansion and adoption. As a result, Bitcoin’s price will likely go much, much higher.

Anthony Pompliano and Max Keiser, two well-known investors in the Bitcoin space believe that Bitcoin price will exceed $100,000 in the next few years. Other investors like Mike Novogratz and Chamath Palihapitiya believe Bitcoin price is destined to go even higher to levels like $400,000 and $1,000,000, respectively. It should be noted that the investors mentioned are worth Billions cumulatively and clearly understand money and markets. As a result, their predictions should be seriously considered.

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Disclaimer: It is important to note that Piggy Bank Coins does not provide financial advice. We don’t endorse or recommend any cryptocurrencies or investments. Instead, we provide information for educational purposes to those seeking knowledge regarding personal finance. However, in the spirit of transparency, note that the author is an investor in cryptocurrencies, including, but not limited to Bitcoin and Ethereum.