Thinking about the future of deeponion and other cryptocurrencies Is it a bubble or a strong technology?
Deeponion and the other cryptocurrencies provide unique services. They are not comparable to fiat currencies, transparency, the facility to know what is happening at all times, the difficulty of swindling the citizen; they are huge advantages (see also the post Interesting Web Pages on Bitcoin and Cryptocurrencies).
In addition, cryptocurrencies have very faithful users, either because it provides them with a service, for ideological reasons, or because they have invested a lot of time and money in them.
People from poor and corrupt countries are the biggest beneficiaries of cryptocurrencies. They allow them to escape local currencies that suffer from hyperinflation, make instant transfers to any place in the world, avoid the risk of expropriation or confinements.
But do cryptocurrencies have value in themselves?
Now, are cryptocurrencies valuable by themselves? There is so much debate with this topic, it is believed that cryptocurrencies add value. They are here to stay, and they have a promising future. Another thing is that today its value will go down, and to stay low for years, which may be. But in the long term I understand that cryptocurrencies compete in several areas:
• As a warehouse of value, competing with gold. Examples are Bitcoin, Bitcoin Gold, Litecoin, etc.
• As an exchange currency, competing with fiat currencies. Examples are Bitcoin Cash, Ripple, Dash, etc.
• As new developments, for example deeponion.
As a comparison, Bitcoin has a "capitalization" (with many quotes, because we will have to see what that means for a cryptocurrency) of 0.3 trillion dollars (as of 12/18/2017). Gold is estimated at 7.7 trillion dollars, so in a waste of optimism we could say that Bitcoin (considered a store of value) could grow up to 25 times at the expense of gold. If you want to contain your optimism, consider only a fraction of that factor.
On the other hand, the money directly accessible to citizens (coins, banknotes, bank accounts) is estimated at 37 trillion dollars. The capitalization of Bitcoin Cash (as an example of cryptocurrency that tries to be a means of exchange) is about 38,000 million dollars, about 1000 times less. Bitcoin Cash (or the cryptocurrency that is) aspires to get a part of that margin. In fact, it probably should not be said that the cryptocurrency is revalued, but that the fiat currency loses value.
And we would have to count how to evaluate the value of other more complex currencies like Ethereum and the like, which as we all know are valuable and generate utility.
What effect are they going to have on the economy?
Can anyone ask, what effect does it have on the economy? It is a deflationary currency. That is, over time, your purchasing capacity grows. Quite the contrary that the coins of legal course, whose capacity of purchase decreases with the time to the rate of the inflation. Inflation is good for the economy as a whole, but it is negative for each citizen in particular.
If deflation is important, as barbarous as 50% per year, it will undoubtedly make you talk. On the one hand, because in economics there is a fear that investments can be postponed. On the other hand, because the saver has a reward, so he does not do anything for his purchasing ability, he grows with time. This is rare, because it is assumed in finance that "the risk free asset does not exist the return of the investment", however, the central banks generate assets of "limited" risk that what is clearer than the negative returns I do not see at the problems.
Therefore, it can have a step of the funds of the currencies in the cryptocurrencies, and that can take power from the states. The citizen may have problems making an international transfer or crossing a border with a lot of money. But with deeponion, bitcoin and other cryptocurrencies this limitation no longer makes sense.
On the other hand, what can be done? It is believed that the first solution that will try to be criminalize the possession of cryptocurrencies. For the average citizen comes to mind negative ideas when thinking of cryptocurrencies. There could be penalties, because as the state had great difficulty in capturing users of cryptocurrencies, when you find an example that can be for the rest.
Given some states that have incentives to provide more and more services not requested by their citizens, and that these are free, they are in the need to raise taxes continuously. They are increasingly expensive, regardless of the services provided. There has never been a counterweight, citizens can not do anything to avoid it, but now there are cryptocurrencies to escape.
The average citizen should work as little as possible. Because as soon as you reach an average salary, any additional income pays more or less half in taxes (counting IRPF and social security contributions paid by the company). And then to spend it, you have to have the VAT, (the state remains). Under these conditions, a state that only stays through taxes with half of what its citizens have worked for becomes a desirable place to live, a tax haven.
Also, if a state treated its citizens badly, there would be a flow of migrant workers and savers who would flee to places where they would live better. Only citizens who want to stay in that country. As companies today, if they are difficult in their day to day, move their headquarters to another country.
Thanks to a multitude of reasons, citizens can now apply geo arbitration. It is irrelevant where people live. We can provide online services anywhere in the world, we can buy with online portals from anywhere, and we can pay and be paid using cryptocurrencies. In a world where people, goods and services, capital can move freely, governments will have to become attractive to retain workers and savers to pay their bills.
If a government were opposed to cryptocurrencies, the only thing that would get would make things worse. In an environment of tax increases and reduction in the quality of services, everyone who works or saves will have an incentive to go to another country. In this way, the intransigent country's economy would be stagnant. The greater the financial repression, the greater interest in investing in cryptocurrencies in order to escape.
Therefore, we can say that cryptocurrencies are an incentive for governments to treat citizens well. They will have to be honest with them, but not because they say it on television, but because if they did not, they would be left alone.
The countries that will do better will be those that adapt to this new economy.