Cryptocoins for good

Cryptocoins for good

How cryptocurrencies can change the balance of power between dictators and citizens

(VencoinBlog) For many years currency
exchange control has been a distinctive feature of dictatorships, from
the “control by the ruble” of the Soviet Gosbank, to the dual currency
system in Cuba, China’s overvaluation of the Yuan, or the exchange
controls in countries like Venezuela and Iran, regimes of all types have
relied on these kind of controls to rein, or at least try to rein,
capital flights, inevitable when -sooner or later- markets try to
correct the excesses committed by money-hungry “revolutions”.
The Gosbank controlled the currency markets using what it came to be known as the “control by the ruble”
Sadly,
citizens are usually the most affected by such currency controls: as a
pseudo-monopoly is established, a black-market is instantly created and
exchange rates climb inexorably, specially in left-leaning regimes where
the government aims for greater control of all aspects of the economy,
affecting the efficiency of the production system and pushing the
trade-balance the wrong way, increasing in consequence the amount of
foreign currency required to cover internal demand. In short, more
expensive currency is required to buy each time more stuff, the result?
Rampant inflation and even more poverty.
Basic
Marxist theory says that the structure of society must be based in
keeping people in poverty, ruled by an upper class with certain rules,
norms and such in order so they can keep people like that. This
old-proven-wrong-policy is still used by many governments today, in
February 2014, for example, some education minister of a Latin American
country said that the government “wasn’t going to take people out of
poverty so they can become political opponents”. This proves that
currency controls are not a consequence of failed economic policies, but
tools for the governments to exert repressing power over its citizens.
Now,
what would happen to oppressive regimes if they were to lose control of
the currency exchange, so the people is free to manage their wealth
beyond the power of government currency controls? Currency
decentralization is not new, 20th century economist and Nobel Prize
Winner, Friedrich August Von Hayek (F.A. Hayek), theorized extensively
on this subject, and though polemic, his writings provided an important
part of the theoretical framework for modern economics, specially in
areas such as theory of money and economic fluctuations.In his book Theory of Liberty he wrote:

“The
experience of the last fifty years has taught most people the
importance of a stable monetary system. Compared with the preceding
century, this period has been one of great monetary disturbances.
Governments have assumed a much more active part in controlling money,
and this has been as much a cause as a consequence of instability. It is
only natural, therefore, that some people should feel it would be
better if governments were deprived of their control over monetary
policy. Why, it is sometimes asked, should we not rely on the
spontaneous forces of the market to supply whatever is needed for a
satisfactory medium of exchange as we do in most other respects?

It
is important to be clear at the outset that this is not only
politically impracticable today but would probably be undesirable if it
were possible. Perhaps, if governments had never interfered, a kind of
monetary arrangement might have evolved which would not have required
deliberate control; in particular, if men had not come extensively to
use credit instruments as money or close substitutes for money, we might
have been able to rely on a self-regulating mechanism. This choice,
however, is now closed to us. We know of no substantially different
alternatives to the credit institutions on which the organization of
modern business has come largely to rely; and historical developments
have created conditions in which the existence of these institutions
makes necessary some degree of deliberate control of the interacting
money and credit systems (my emphasis). Moreover, other circumstances
which we certainly could not hope to change by merely altering our
monetary arrangements make it, for the time being, inevitable that this
control should be largely exercised by governments”

Governments
have assumed a much more active part in controlling money, and this has
been as much a cause as a consequence of instability
F.A. Hayek
But,
what if it was no longer inevitable? During the 20th century creating
and managing currencies was only possible for governments, so it was in
essence exclusively a political matter, but technology is changing that,
money issuing is not only government turf anymore, they now must
compete with cryptocurrencies. In governments with an effective rule of
law, this can be fair competition, for example, currencies can be
somehow regulated -as the IRS recently did in the US- and a legal
framework can be established so everyone can play by the rules. But,
there are many countries where the line between state and nation is
blurred, these countries may also take two additional paths, they can
prevent financial institutions or businesses from transact with
cryptocurrencies (e.g. Colombia and China) or they can declare an
outright ban (as it is rumored about China every single day). In both
scenarios cryptocoins could have a very important role, in the former
-while remaining legal- they can create a new channel for the flow of
foreign currencies, in the latter they can work as a relief valve, as an
alternative for the black market. In any case, by increasing the supply
of foreign currency, these coins can effectively push prices down, with
all the benefits that comes with it.
For
once, the development model that could arise from an efficient
cryptocoins market presents a development plan that is not based on
plain charity, in giving away something with the hope that the recipient
will make a good use of it and luckily return it back in future
productivity. People cannot only mine their own coins but they can rest
assure that the value of such money will be subject to fair rules of
supply and demand, not to devaluation-based political planning; and most
important, they may not be held hostage in poverty by exchange
controls, giving back to them a little of that sovereignty that
dictators keep claiming or themselves.

Open your free digital wallet here to store your cryptocurrencies in a safe place.

Satoshi
Satoshi

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