"What is Bitcoin for?". This is a legitimate question, but it is often rejected by the crypto community. We must stop treating healthy skepticism as something that alienates people and makes cryptocurrencies look like cult technology.
You have likely heard of the gold standard. The gold standard was a system that allowed people to exchange money for gold. It was designed to protect the value of paper money by binding it to one of the oldest and most reliable repositories of value.
Think about it for a second. Suppose you want to buy a cow from a farmer. The problem is that you have to go to the bank and exchange your money for gold to buy the cow. We are confident that the amount of gold available in the world is growing slowly and predictably. That is why the cow seller accepts gold as a means of payment. But there are worries that governments are printing too much money, causing inflation.
The problem is that the gold standard is not an idea. It is an elegant solution to support a currency with a stable and reliable asset. People trust gold because money has value. If you trust that, no matter what, your paper money will always have a perceived value, you can exchange it for gold.
Let's look at history to show why this is a problem. In 1933, a series of events in the US caused the US dollar in 1933 to lose 70% of its value in gold. People began to exchange large quantities of cash for gold. Governments have lost confidence and betrayed the people. In response, Franklin D. Roosevelt closed the banks in a desperate attempt to stop the bloodshed. It was not a good result for everyone involved.
Banks were on the verge of collapse. Citizens stood idly by as their savings went down the drain. The gold standard, which for a time had worked as well as ever, was doomed to failure under the strain of the crisis.
Crypto technology has the potential to solve this problem. Imagine another way of exchanging money for gold. It would not involve any bank or person facilitating the transaction. To comply with the social contract, gold would have to be exchanged for paper money. It sounds crazy, but cryptovending machines are not a futuristic idea.
Exchanging cash for real gold is a little more difficult. We can make a vending machine that dispenses virtual gold instead of bitcoin. After all, we are talking about an intelligent contract.
But we can go a step further. Vending machine reserves could be topped up with different types of assets, giving people more options in exchange for cash. Incentives could be created for governments and individuals to contribute to the reserves.
There are many things we can do with cryptocurrency reserves that traditional finance would not be able to do. Cryptocurrencies are much more stable and reliable than conventional money.
This may seem strange when you hear it from the cryptoworld. Today, speculative investments drive cryptocurrencies up and down on a whim. This is anything but stable and reliable.
I believe that this is because we are learning new technologies. Take a minute to think about an analog technology: the Internet. You will remember how crazy it was 20 years ago. We experienced the dotcom bubble and were worried that Y2K would send us back to the Stone Age.
Fast forward 20 years and compare that to the Internet we are experiencing today. The Internet has become a stable tool on which we can rely. In 10 years, crypto will be as reliable as the Internet today.
Before we reject the idea that crypto is the gold standard, we should build on it. Crypto and internet will merge to this crazy thing called Web3. Predicting the future is a messy business. I'm pretty sure the future of cash will be digital. For cash or crypto, there is no obvious, direct path to that future.
In summary, the gold standard was a good idea that failed because of unreasonable promises that were not implemented. Crypto technology equips us with the tools to create a better alternative. Now it is up to us to come together and make it a reality.
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