A new monetary ecosystem is emerging. But you probably already knew that. What has yet to be determined is just how the historical forms of money are going to play together with the new kids in town.
Imagine if you were the owner of a dance studio that for decades had been churning out the most widely-acclaimed dance production in the city. It was made up mainly of traditional waltzes with an occasional polka number thrown in. While predictable, the audience was comfortable with the consistency of the experience.
Then one day, you’re told that you have to open your production to a new and more energetic form of dance. It is a combination of jazz and hip hop. Not only that, but few if any of your performing crew fully understand it, and nobody is very good at it. Oh – and the company owners are under pressure to choreograph a new production to be released in the not-too-distant future.
Welcome to the world monetary system.
National fiat currencies, along with traditional stalwarts of gold and silver (waltz and polka), are being asked to put on a world-class production that now must include a bevy of cryptocurrencies (jazz and hip-hop). Seasoned professionals must work alongside a mix of newcomers (solid projects) and some who have no business even being on the dance floor (ICO scams).
Meanwhile, the instructors (regulators) either are throwing their hands up and walking away, or are trying to control the newbies with rules they don’t understand or agree to. Some of the seasoned veterans on the team have abandoned the waltz, and are joining this exciting new dance that has yet to be defined.
I say again – Welcome to the world monetary system.
Related: Are Cryptos Money? Not Yet.
How Will This End?
There are several possible outcomes to such a situation:
The cast fights among each other and the instructors blow up the whole thing by getting heavy handed. Nobody comes to the show and the dance company folds. It is a decade before another company comes to town.
The new style completely confuses the traditional cast and they all quit, leaving the town to adjust to a completely new production – one that they aren’t sure if they like, and can’t see themselves getting comfortable with.
Or, the traditional cast, along with the instructors, take a deep breath and begin to speak some wisdom into the newbies. They shape a new production based on the experience and values and elegance of traditional waltzes, which brings a bit of order and sanity to what otherwise looks like chaos.
Frankly, the latter outcome seems most likely. Gold, silver, and national currencies will always have a place in the emerging monetary eco-system. The 5000 year history of gold and silver will anchor the new system to reality – both literally and figuratively. Governments will not give up their national currencies. It is unrealistic to expect them to. And the crypto world still has to figure out who can dance and who the pretenders are.
Just how much influence each style of dance has on the final production will depend a great deal on two primary factors:
1) How quickly (if at all) will the newbies kick the pretenders off the stage by themselves?
2) If the instructors are called in to bring order, will it be the traditionalists, or open-minded realists who decide how to run the final production?
Definitely interesting dynamics in the world of money. Welcome to the dance.