Friday, July 18, 2014

Rethinking Money-7

Have you ever thought of bank as a holder of cash? Just try to observe your relationship with bank in the smartphone and online age? Are you noticing that this is a strange age in a special sense? Today, you use cash as currency paper note. You are always in need of this cash and a bank is the provider of that cash. There is monopoly of bank in terms of providing cash flow to the people. But think if that currency note goes digital. This means that in a bank server, this is a digital figure or a bit of information. Similarly, when you use your mobile smartphone, tablet or computer for financial transaction, it means that your money is a just a digital figure or a data. Practically, there is no difference between you and the bank holding digital money. That makes you a digital equivalent of a bank. It also means that the bank does not have the monopoly it  used to have. What can happen if instead of banks, you and millions like you stop using any such currency. This will be equivalent of bank run because now, you are the real bank who holds money. Think if ten million people just exchanged a hundred dollar note for an unknown currency. It would be a figure of 1000 million worth of new currency. People will use the new currency but will dump the dollar. The one billion dollar cash would be gone for good.  Now, just forget this assumption for some time and read the following.............
Everybody says that dollar will eventually lose this status of reserve currency but nobody challenges the US power to stop the powers that challenge dollar. After all, the one who creates money out of thin air, would remain powerful till the world stops using that money. The people don't have an alternative. They created bitcoin but the too much of dollar cash in the hands of federal powers has already bought a majority of bitcoins and has locked it out of common man's use. The first warrior is dead but don't forget that the world is using at present over 200 digital currencies like ripple coins, dogecoins and many more. The world is like a big bank with dollar deposits in the hands of people and can you imagine how much money, people can exchange in a minute, an hour, a day, a week, a month or so on? When people choose to dump dollars for bitcoin like currencies, there will be change. This will not be bank run but rather, it will be currency run. The toxic inflation-driven cash will simply fly once mob starts doing it. Remember that people use money and by using that money, they make the creator of that money the king of users. No scholar can predict the timing of this change. Just think of the power of over three billion smartphones choosing to start something of this kind! People will change the system; governments won't.

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