Will cryptoeconomics contribute to the redistribution of wealth in the world?

The concept of private currencies began in the last century

The private currency concept is not new and for the first time it was mentioned by followers of the Austrian school of political economy Klein and Von Hayek during the 70’s of the last century. Von Hayek along with other cryptoenthusiasts believed that the state monopoly to issue currency had negative impacts on society. The economist recommended to consider money as a commodity with the сonsumer properties and produced on the market without state participation. According to the scientist, in the course of competition, weak currencies (not backed and badly managed) will disappear and as a result only currencies which carry out functions of money to the best advantage will be chosen by the “invisible hand of the market”.

Private currencies are already used

It is worth mentioning that in everyday life we have to deal with private currencies. An illustrative example is virtual money in games and various tokens, stickers, etc. which are handed out in shops in frames of loyalty programs and which can be exchanged at those shops for goods. In the USA under the legislation it is allowed for municipalities to issue private currencies but only under conditions where private currencies will be in less profitable conditions in comparison with the dollar. The extensive use of private currencies is not possible as, for example, it is not possible to buy bread at a supermarket with bonus stickers of a building material store.

Supporters of cryptoeconomics dream about the full restructuring of the monetary system. They believe that blockchain technology will allow to create a new economic reality where anyone wishing to “create” money will be able to do so and games of politicians will not have an impact on people’s incomes anymore.

Should the right to issue currencies be given to people?

Some experts believe that very soon the time will come when everybody will be able to issue currencies and practically every company will have its own electronic currency.

“Everybody has a right to mine gold, diamonds or produce oil, so why not to get the right to issue currencies?”- asks one of the experts. - Until recently one of the biggest obstacle for this was the lack of trust in miners. But the bitcoin white paper by Satoshi Nakamoto, the start of Bitcoin and creating of Ethereum helped to reduce and hopefully to solve this problem. However, the problem of cost estimation of the issued cryptocurrency still remains unsolved.

According to the expert, it is possible to check the purity level of gold, diamonds and oil and to determine their value, where as to define the value of cryptocurrency it is necessary to take into the account marketing efforts of a team, innovations and possibilities of exchange. That’s why the pressing question now is not whether it is allowed to issue cryptocurrency but how to improve the emerging system of the use of cryptocurrency.

In the opinion of Grant Blaisdell, co-founder and chief marketing officer of Coinfirm, it is important to take into the account the possibility of mass use of alternative money as well as normative and pragmatic functional aspects. The great majority of cryptocurrencies cannot and should not be considered as money as they are not approved by society and authorities. Besides cryptocurrency creators do not always want their cryptocurrencies to be considered as money as they were created for other purposes. Nowadays the cryptosphere depends on how much fiat money is given for this or that cryptocurrency. The expert suggests that this situation will not change in the near future as the majority of people need something tangible and a national currency gives them that feeling.

According to Mihail Lala, founder of WAWLLET, governments will not be happy about the idea to transfer the right to issue currency to just anybody and this is unlikely that private currencies will be used extensively, however in terms of a small community private currencies can be easily applied.

Along with this, Nick Martyniuk, co-founder and CEO of WePower pointed out: “What is offered by system of blockchain is not in fact connected with private currencies, instead it is a tool to transfer funds and it does not require centralized control”.

New currency – new billionaires

Some cryptoenthusiasts, including the respected experts from cryptohead.io, believe that diffusion of blockchain technology will contribute to the fairer redistribution of wealth in the world and a situation where only 3% of population consolidate wealth will change in the near future.

In addition, other experts suggest that the total of wealth in the world is not just a zero-sum game and wealth is constantly accumulated. That’s why the redistribution of wealth in the world is possible but not on a global scale where as an improvement of the well-being of population seems to be quite realistic.

According to James Song, founder of Exsulcoin, there are already cryptomillionaires and today on the cryptomarket the immense wealth is formed. The expert has also pointed out that the cryptomarket cannot offer anything to people who own assets of the value less than 10, 000 dollars, do not own a PC, do not have internet access, bank accounts and this is the majority of people.

In theory the creation of a system of private currencies looks rather realistic. However, it is necessary to answer the question whether the deprivation of the right of a state to issue currency will actually contribute to reducing inequalities and the growth of common prosperity. It is also worth considering if modern society is able to ensure the viability of the new monetary system where backing of currency is based on just trust in a miner.