$100,000,000,000,000 (100 Trillion) Reasons Crypto is better than Fiat Money
This is a legitimate hundred trillion dollar banknote — It’s also worthless.
Please excuse the overly dramatic use of zeros in the title, but I feel it’s necessary. Count them — that is FOURTEEN ZEROS behind the one.
This is an authentic banknote.
This is also recent history (2008).
Today, this banknote is not worth the paper it’s printed on.
In fact, if you would like your very own authenticated $100 trillion dollar banknote, you can pick the real thing up on eBay for a few bucks plus shipping. These banknotes are now sold as novelty and collector items.
It's almost laughable.
I promise to pay the bearer on demand, One Hundred Trillion Dollars for the Reserve Bank of Zimbabwe.
The sad truth is this is no joke.
Is this even real?
Yes. Zimbabwe is a real country with real people and real problems. Over 14 million people live in this beautiful country located in the southern part of Africa. Thanks to this infamous banknote, the country and people of Zimbabwe may forever be known as the country with the largest worthless denominated banknote in history.
What Happened to Zimbabwe?
The short and simple answer is the Reserve Bank of Zimbabwe (RBZ) began printing money to account for government deficits. This practice worked so well, that they continued it do so for many years. This action alongside government reforms and monetary policy is said to contribute to the rise and escalation of hyperinflation.
The inflationary period started in 2007 and within two years, (by the end of 2009) hyperinflation had gotten so bad, that the country just stopped printing its own currency.
Just before the government halted the printing of all its currency in 2009, they made one last attempt to solve the problem.
During this hyperinflationary period and the frenzy that ensued, government officials decided the solution to their inflationary problem was simply to print larger denomination banknotes (go big or go home, right?).
Following this logic and in concert with the rapid escalating hyperinflation during 2008, the world’s largest (and infamous) banknote in history was born.
I’m sure somebody realized the utter ridiculousness of such a decision. As a consequence, it is worth pointing out the Zimbabwean banknotes are one of the very few banknotes (in history) that doesn’t profile a famous historical figure or political leader.
Rather, it features balancing rocks.
I’m sure it’s a metaphor for something — the precarious nature of their currency?
Either way, these were the last banknotes printed as the Zimbabwean government stopped printing its own currency in 2009.
At that time the US dollar was already in widespread use (as an unofficial alternative currency) and a few years later the US dollar became the official currency of the country.
The ReIntroduction of the Zimbabwean Dollar in 2019:
It should also be mentioned that the government of Zimbabwe did try and reintroduce their currency ten years later, however without much success.
In 2019, the Zimbabwean government reintroduced the Zimbabwe dollar and within a month of this announcement, it suffered inflation of almost 200%.
The most recent numbers suggest (2020) that the inflation of the Zimbabwean dollar is about 500% annually.
While Zimbabwe will continue to suffer from hyperinflation, it is not the only country that has this problem.
Venezuela — The Zimbabwe of Today
What happened in Zimbabwe is also happening in Venezuela, a South American country with a population of over 29 million people. Over the last few years, Venezuela has seen some of its worst inflation with some estimates claiming it's even higher than Zimbabwe.
Venezuela's inflationary problems started in 2014 and it has only got worse in recent years.
The Central Bank of Venezuela (BCV) officially estimates that the inflation rate increased to 53,798,500% between 2016 and April 2019.
In April 2019,
the International Monetary Fund estimated that inflation would reach 10,000,000% by the end of 2019.
Inflation is a consequence of a broken system
Zimbabwe and Venezuela offer two extreme examples of the effects and consequences of inflation. But make no mistake, all fiat currencies suffer from inflation. It's just the inflation of other currencies is not (yet) as extreme.
On a positive note
One positive perspective that can be said to come from this is the greater awareness and interest in learning the truths about money.
The people of these countries, no longer do they take for granted the face value of their government's fiat currency.
During these times of hyperinflation, people begin to ask questions like:
- Why is this happening?
- Where does the money come from?
- How is money made?
An important question that needs to be answered in this journey of discovery is understanding…
What is Fiat Currency?
There are different classifications of government-issued money. While it is not well known, the origin of most printed money was in the form of paper money that represented a value in a physical commodity, such as gold or silver.
This was known as the gold standard.
Those were the days when you could trade a piece of paper in for actual gold or silver coins. However, the gold standard ended in 1933.
Today there is nothing backing most all government currencies other than the government’s own promise to pay.
As we have seen with Zimbabwe, with nothing of physical substance backing a promise, in a time of inflationary pressure, the banknote simply becomes a worthless and broken promise.
The +100 Trillion Reasons Crypto is Better than Fiat
The title of this article makes a rather audacious claim to give 100 trillion reasons why crypto is better than fiat.
So, let’s begin with the first reason.
Reason #1 — Capped Supply
Programatically and or through consensus agreement, cryptocurrencies have a predefined maximum and total supply.
In the case of Bitcoin, only 21 million coins will be minted and no more. These values are programmatically determined and fixed unless an alternative consensus agreement can be reached. The values are known, transparent, and traceable. The same can’t be said for government-printed money.
Reason #2 — Proof of Effort / Work
There is very little preventing a Federal reserve from just printing up some more money. There is very little additional cost to print up a few hundred million or billion more. In the electronic age, this is quite easy with a few strokes of the keyboard.
If the gold standard still existed, money would not be able to be printed (or created) without the corresponding value in gold backing it.
It could be argued that the cryptocurrency version of the gold standard is the cost associated with creating a transaction, through either a mechanism called Proof of Work (POW) or Proof of Stake (POS). Although differing methods, both have a cost associated with the transaction, ultimately preventing the unlimited creation of more currency.
While these two reasons address the major contributors to the hyperinflation experienced by both Zimbabwe and Venezuela, cryptocurrency does have a massive advantage that no fiat currency can ever come close to.
The other +100 Trillion Reasons Why Crypto is Better
Cryptocurrency gives YOU — the individual the power and ability to create and issue your very own currency. If you wanted to create a crypto-currency with 100 million or 100 trillion coins, in theory, you could.
This is a first in human history
The ability to create and issue a currency until recently was only possible by sovereign nations and large kingdoms.
At no other time in history did the average person have the ability to create and issue their own medium of exchange.
Today the average person with basic technical knowledge can create and issue their very own currency.
This is a HUGE MILESTONE for Humanity.
And when we see the success of a joke cryptocurrency like Doge, a cryptocurrency that was created on a lark and now has a market capitalization in excess of the GDP of many countries — what we see is a massive move toward the potential for individual financial sovereignty.
This also poses a massive risk to those sovereign nations. This makes it understandable why many countries are fearful of supporting this technology defining it as currency and treating it as legal tender.
Cryptocurrency gives the individual the power to create and issue their own currency — their own medium of exchange.
The Future of Crypto
What took place in Zimbabwe is a sobering reminder of the consequences of hyperinflation under a fiat monetary system. Fortunately, cryptocurrency has many mechanisms in place to avoid such consequences.
In the eleven years cryptocurrency has been with us, it has become one of the fastest-growing industries in the world and potentially a multi-trillion-dollar industry. And to think, this industry isn’t even a teenager yet.
We used to live in a world limited by the number of sovereign nations and the currency they issued. Today, anyone even their dog can create their own cryptocurrency.
We may be living in a near future where there aren’t just tens of thousands of cryptocurrencies, but millions of cryptocurrencies. In this modern world owning your own cryptocurrency may be as common as owning your own house, boat, or car.
Every human on this planet has the potential to create and issue their own cryptocurrency.
If that isn’t +100 trillion good reasons, then feel free to lodge your complaint in the comments below ;)
Trade Safe.
