This might seem counter-intuitive. Cryptocurrency, even though it is entirely electronic, would function better in a mass connectivity crisis than the current system of government fiat currencies. Several reasons tell the story of why this is the case.
Among the small number of trinkets that represent man's first use of coinage, there exists a number of coins (more than one and from more than one period) shaped like steer horns. These were probably Auroch horns, an early and very big cow that died out in the 1500s. The reason the coinage is shaped like a pair of horns is that those Aurochs, or whatever cow variety they were, represented the most important item of trade for the communities that made them. Cows were king. Without them, these communities would have little of value for trade.
This was also a tool of communication. The steer horn coinage shape would, by the fact that it suggested cows, tell traders which community they came from and what was their main item of trade. Want a cow, go to these people.
Most of today's currency is masked by symbols that mean very little outside of their historical context. Our currency's today have representations of buildings, former leaders, and archaic patriotic symbols. Yet, without these things, our societies would still pretty much function the same. If Edith Cowan or Abraham Lincoln disappeared from time and space, not much would change. They are not our cows, so to speak.
So what is? Today, electricity and the Internet are the cows, at least that's the impression according to a recent Zerohedge article. Perhaps a lineman on a pole would be a more appropriate figure for printed currency.
Imagine if the Internet went down, even for a week. Don't just think of Netflix or that you might have to find your stash of ancient Penthouse VHS tapes. Think about the grocery store. Are you confident they could keep the shelves stocked practicing 'just in time' inventory? 'Just in time' inventory is where the retailer keeps no stock and relies on the Internet and Big Data to determine how many boxes of Quaker Oats to ship to your store, the very next day. How would that work with a down Internet? How about in the future? Maybe today it's not a problem, but if the Internet goes down for a week ten years from now, are you confident the driverless trucks will be able to get to your grocery store anyway?
Oh, and how would you pay for stuff?
The article in Zerohedge looked at the fact that 95% of US Dollars are electronic. In an extended electrical or Internet outage what would happen to them? Local branch banks would have to make physical transfers. It's possible. Wells Fargo still keeps a stable of horses. True story. If you're an orphan you could get a job with the Pony Express.
What happens when 95% of the currency in a country disappears? At least, 95% of your currency disappears, that's what happens.
So then why are cryptos better? They are entirely electronic. Yes, but unlike the dollars in your bank, they can be kept on devices, personal computers, or memory cards. One Latin American crypto investor is selling vault space for billionaires to safely store their cryptos. You can't store your own electronic dollars on your own device. That kind of thing isn't possible from a central bank ledger.
In this way, cryptos may function as the savior of a whole mess of problems that would be nauseating to take the time to illustrate. In the current scheme of fiat and basket (case) currencies, any major interruption would be fraught with a mess of efforts, likely done with 2oth Century communication tools like radio. Morse Code would almost certainly make a comeback. Any central bank solution would take long enough for you to get very hungry at the very least.
In an event where the Internet went down for an extended period but would eventually come back up, say once electrical grids come back online, you'd be making a smart bet to say that trading in cryptos would advance through commerce faster than a central bank's plan. Sure, under some extreme scenarios those who want to prosper would have to adapt to a 19th Century environment. But anything can happen, and reality dependably falls between extremes.
Buying and keeping a fair number of cryptos in a safe place is likely more important than the stack of cash you've already set aside.
The more things change, the more they stay the same. Nah, too cliched. More accurately, the more people who claim they have new ideas, the more likely they found their idea in an old YouTube video.
See if this sounds familiar.
Once upon a time in Alberta, Canada, a political party called the Social Credit Party rose to power, not just power, but they controlled 80% of the elected seats in the province. This was in the mid-1930s, during the Great Depression. They didn't like capitalism, and they believed money was corrupt. They felt the government should motivate people to do socially minded things, instead of chasing after capital, profits, and wages.
Is your head spinning yet?
While they came to power with the promise of a guaranteed income of $25 (a good week's salary) a month, the party quickly realized the impossibility of this scheme since as a province of Canada, they could not print their own money, and did not want to create an additional tax burden.
So what did they do?
They printed their own money anyway, which they called scrip. They distributed their scrip to the people of Alberta, and to motivate them to spend it, they set expiration dates. Each week, the scrip holder would be required to place a sticker on each piece of scrip that would devalue the scrip by 2%.
This is negative interest, Great Depression style, and Europe is thinking about how blockchain might help create a similar style of expirable currency when the next the economic fit hits the shan.
When there's nothing else to do, put money in people's hands and kick their butt's to spend it.
How do we know Europe is contemplating its own cryptocurrency with an expiration date. That insight goes to a Zerohedge article, by Pheonix Capital, that sites an ECB (European Central Bank) insider.
Like the idea, waking on Monday to find your bank account has 2% fewer whatever's in it? Already, while cryptocurrency is in its infancy, Europe's government is looking at how they can perform a circumcision on the concept. This kind of behavior may make you lean toward those who say that politicians cannot help themselves but to make extraordinary efforts to reign in technologies that enhance people's freedoms. In the case of currency, their atrophy is showing.
What will be interesting to watch in any future economic fit will be if cryptos supplant fiat currency and become a safe haven the value of which will move opposite to market downturn. It's anybody's guess what will happen.
What do you think? Will people embrace being paid in an electronic currency that melts out of their bank accounts, or adapt to Bitcoin and other cryptocurrencies?