There has been a lot of discussion as to why the banking ecosystem needs to change, rather than to stick to its centralised model. Then again, there are so many negative aspects associated with the money we use today; it becomes only more obvious centralised systems are on their way out.
What Is Wrong With The Money We Use?
Although the list of negative aspects is a lot longer than most people assume, there are some recurring topics. First of all, there is a dangerous counterfeit bill risk in the world, regardless of which fiat currency one uses. Despite best measures by central banks to add new layers of anti-counterfeit measures, such as holograms, there seems to be a growing number of fake bills.
These fake bills have another effect which very few people take into account: spending counterfeit money could lead to people going to jail. This is a particular worrisome scenario, as cash is untraceable and completely anonymous, making it impossible to say where the fake bills originated from. While no one will go to jail for smaller amounts, significant transactions with [a portion of] counterfeit money will cause issues for the people spending money.
Most people are well aware of how the money we use is printed and issued by central banks all over the world. However, the money they print is not backed by any tangible assets, making it effectively worthless. All it allows consumers to do is transferring IOU’s from one person to the other, which have an alleged value to the recipient of funds.
Speaking of central banks, they loan out a portion of consumer-deposited funds to other institutions and customers to make a profit. Moreover, the funds we loan from the bank has to be paid back at significantly higher rates than what the bank has to pay for controlling this money in the first place. Such a business model is not unusual, but it is something a lot of people overlook.
Last but not least, consumers and enterprises have to keep in mind that money loses its value over time. Not because the bills or coins are showing wear and tear, but due to devaluation as a result of inflation. Central banks keep creating new money every so often, which lowers the value of the previous supply by a margin. The US$20 worth of groceries you can buy today will not get you US$20 in groceries next year.
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