The Future of Digital Currencies

“Oh, but now it’s digital.” The “digital” word comes from Latin digitalis, from digitus (“finger, finger”); now use is synonymous with computers and TVs, cameras, music players, watches, etc. But what about digital money or even digital democracy?

The printing press at one time sparked a revolution, which many welcomed as a democratic force forever. Books available to the masses were indeed a revolution; and now we also have e-books and technical devices to read them. The fact that the original words have been digitally encoded and translated into words electronically does not mean that we have less confidence in the words we read, but we may still prefer the aesthetics of a physical book to a piece of high-tech plastic. the battery that needs to be recharged to continue working. Can digital currencies like bitcoin really contribute so dramatically to positive social change?

To answer it, we have to ask ourselves: what about money, how should we understand, use and integrate them into a sustainable model of a “better world for all”? Money, unlike any other form of property, is unique in that it can be used for anything before an event occurs. It does not imply anything, but can be used for great good or great evil, and yet it is only what is, despite its many manifestations and consequences. It is a unique product, but it is poorly studied and poorly used. Money has the simplicity that facilitates buying and selling, and the mathematical complexity that financial markets demonstrate; and yet it has no idea about egalitarianism, moral or ethical decision-making. It acts as a standalone object, but is both endogenous and exogenous for the world community. It has no personality and is easy to replace, but in a broader context it is seen as a limited resource, and its growth is governed by a complex set of rules that determine its behavior. However, the results are never completely predictable and more so; adherence to social justice and aversion to moral shame is not a prerequisite for its use.

In order for a currency to effectively perform the financial functions required of it, the internal value of money must be a common belief of those who use it. In November 2013, the U.S. Senate Committee on National Security and Government Affairs recognized that virtual currencies were a legitimate means of payment, such as bitcoin. Because of the very low transaction fees charged by the bitcoin network, it offers a very real way to transfer money from migrant workers who send money back to their families without having to pay a transaction fee. The European Commission has calculated that reducing global average remittances from 10% to 5% (the 5×5 initiative approved by the G20 in 2011) could result in an additional $17 billion in remittances to developing countries. using blockchain will reduce these costs to almost zero. Those money transfer companies that profit from the system may be deprived of intermediaries through such infrastructure.

Perhaps the most important point to be noted for cryptocurrencies is the distributed and decentralized nature of their networks. With the development of the Internet, we can only see the tip of the iceberg when it comes to future innovations that may use the unexplored potential for decentralization, but on a scale previously unseen or invisible, unimaginable. Thus, while there was a need for a large network in the past, this could only be achieved through a hierarchical structure; hence the need to transfer the “power” of this network to a small number of people holding a controlling stake. We can say that Bitcoin is a decentralization of money and a transition to a simple systemic approach. Bitcoin is no less significant progress than peer-to-peer file sharing and Internet telephony (such as Skype).

For digital or virtual currencies there are very few well-designed legal norms, but there is a wide range of existing laws that can be applied depending on the country’s legal financial base for:

Taxation, banking and remittance regulation, securities regulation, criminal and/or civil law, consumer law/protection, pension regulation, regulation of goods and shares, among others. Thus, the two main problems that bitcoin faces are whether it can be considered legal tender, and if it is considered an asset, it is classified as property. National states usually explicitly define a currency as a legitimate means of payment of another nation-state (such as the U.S. dollar), so that they do not formally recognize other ‘currencies’ as a surrender. A notable exception to this rule is Germany, which allows for the concept of a “settlement unit” which can therefore be used as a form of “private currency” and used in “multilateral settlement circles”. In another case, when they are considered property, the obvious gap is that, unlike ownership, digital currencies are able to break into much smaller amounts. Developed and open economies are usually open to digital currencies. The United States has published most of the guidelines, and they are detailed in the table below. In fact, capital-controlled economies are by definition contradictory or hostile. As in many African and other countries, this issue has not yet been resolved.

Based on the principles of democratic participation, it is immediately clear that bitcoin does not correspond to the component of the positive social impact of such a goal, because its value is not what it can influence, but depends on market forces. However, any ‘new’ cryptocurrency can ensure democratic participation when the virtual currency has other rules of governance and release based on more social-democratic principles.

What if the “digital” currency could offer an effective alternative to existing forms of currency, making a positive contribution: to promote a socially inclusive culture, equal opportunities and promote mutual assistance; which, as their name suggests, are an alternative to the official or national sovereign currency and/or complement it?