Categories: GeneralPublished On: July 20th, 20202.7 min read
Which is a better store of value – Crypto or Fiat
Critics of cryptocurrency have sometimes referred to digital currency as “Monopoly money” – referencing the popular board game Monopoly, which has long served as a metaphor for capitalism-writ-small. The implication is that cryptocurrency is nothing more than a worthless toy. But more and more, inflationary government-issued fiat currency seems to be the actual Monopoly money – especially with the emergence of innovative new stablecoins backed by precious metals.
Monopoly Money Deflates, Fiat Money Inflates
A user on a cryptocurrency enthusiast Facebook group pointed out that the game of Monopoly sold for US$2 in 1935 – yet now the pretend paper money from said game sells for $50. And funnily enough, while the value of Monopoly money has increased since 1935, it now takes roughly $19 to match the purchasing power of $1 from 1935. (Interesting to note the proximity to 1933, the year in which the USA began its abandonment of gold-backed currency.)
A Brief History of Currency Backing
Throughout history, currency often came in the form of coins minted with precious metals such as gold, silver and copper. But eventually it became cumbersome to conduct retail commerce with precious metal coins directly, so the coins or bullion would be held in banks, who exchanged paper notes which could be redeemed at any time for their worth in gold or silver. These paper notes were then traded themselves and held value – but they were always backed by something of real value.
This began to change with the increased popularity of fiat currency. The term “fiat” comes from Latin and means “let it be done” – i.e. the value comes from the order or proclamation of an authority, and nothing more. While fiat money was first used hundreds of years ago, the 20th century is when it became the dominant form of currency, culminating with the U.S.’s unilateral cancellation of the U.S. dollar’s convertibility to gold in 1971.
Depending on one’s perspective, fiat currency certainly has advantages, such as giving governments the ability to more closely regulate money supply and inflation. However, there are great dangers to fiat, such as the possibility of hyperinflation when the issuing body can no longer guarantee the value of its currency. Thus, fiat money becomes a very dangerous game over the long run – especially in times of economic instability and crisis.
To this end,Stably has taken the revolutionary step of developing a cryptocurrency to be backed by precious metals. Anyone in the cryptocurrency space will be familiar with fiat-backed tokens such as USDT or Stably’s own USDS. Fiat-backed stablecoins serve a very useful purpose, but Stably isn’t stopping there. Visit our Stablecoin-as-a-Service webpage to learn more about how we are committed to providing the widest possible range of stablecoin solutions, and in 2020 will introduce both gold-backed and silver-backed stablecoins. By doing so, Stably will eliminate the obstacle of crypto volatility, as well as safeguarding against any potential instability of fiat currencies – providing a viable, practical cryptocurrency solution to the world.
Stably is a US-based FinTech providing fiat onramp and stablecoin infrastructure to digital wallets, decentralized applications, Web3 projects, and blockchain development organizations. Our mission is to power the next billion Web3 users with a superior fiat <> crypto onramp to all popular and emerging blockchain ecosystems.
RISK DISCLAIMER: Digital assets involve significant risks, including (but not limited to) market volatility, cybercrime, regulatory changes, and technological challenges. Past performance is not indicative of future results. Digital assets are not insured by any government agency and holding digital assets could result in loss of value, including principal. Please conduct your own thorough research and understand potential risks before purchasing/holding digital assets. Nothing herein shall be considered legal or financial advice. For more information about the risks and considerations when using our services, please view our full disclaimer.
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DISCLAIMER: Stably Corporation (“Stably”) is a blockchain and financial technology service provider, not a bank, with a registered address at 16192 Coastal Hwy, Lewes, DE 19958, USA. Stably Trading LLC (“ST”), a wholly owned subsidiary of Stably, is a FinCEN-registered money service business (MSB) with registration number 31000251219597 and a registered address at 10 E Pearl Ave Suite 200, Jackson, WY 83001, USA. Stably’s fiat orchestration partner, Bridge Building Inc. (“Bridge”), is a FinCEN-registered MSB with registration number 31000252673675 and a registered address at 1501 Hillmon St, Austin, TX 78704, USA.
Blockchain-connected products and services offered by Stably and ST are built on top of Bridge’s infrastructure via manual and automated integrations, leveraging its financial services including but not limited to: fiat custody, funds processing, virtual currency exchange, convertible virtual currency (CVC) administration—as defined by FIN-2019-G001—plus Bank Secrecy Act (BSA) and anti-money laundering (AML) compliance services. Bridge is not an FDIC-insured institution but it works with FDIC-insured banks to hold US dollars (USD).
Stably Ramp (“Stably Ramp”) is a non-custodial fiat-to-crypto on and off-ramp platform that enables a verified account holder (“User”) to mint/redeem stablecoins as well as buy/sell stablecoins and other digital assets using fiat and blockchain payment methods. Fiat payments are processed by Bridge and blockchain transactions may be processed by Bridge, Stably, ST, or LI.FI (“LI.FI”), a decentralized exchange and token bridge aggregator. Only Users whose identities and funding sources are verified by Stably, ST, and/or Bridge for compliance with its terms and policies, including BSA/AML programs, are allowed to mint/redeem or buy/sell stablecoins and digital assets with Stably Ramp. Deposits and disbursements to/from a Stably Ramp account to third parties other than the account User are prohibited.
Stably USD (also known as “Stably Dollar” or “USDS”) is a multichain stablecoin fully backed with liquid USD-denominated assets such as cash, cash equivalents, and/or stablecoins. The collateral assets are held by Bridge and/or ST for the benefit of verified USDS token holders, including white-label versions of USDS like VechainThor VeUSD. Bridge and/or ST are the CVC administrators of USDS and its white-label versions. USDS and its white-label versions are not FDIC-insured. Every USDS token, including its white-label versions, may be minted/redeemed 1-to-1 with USD or USDC according to Stably’s terms and policies, minus fees, through a Stably Ramp account.
Stably BTC (also known as “Stably Bridged Bitcoin” or “BTCS”) is a cross-chain Bitcoin (BTC) bridged token fully backed with BTC held by ST for the benefit of verified holders of natively-issued BTCS tokens. ST is the CVC administrator of BTCS. Every BTCS token may be minted or redeemed 1-to-1 with BTC according to Stably’s terms and policies, minus fees, through a Stably Ramp account.
Stably ETH (also known as “Stably Bridged Ethereum” or “ETHS”) is a cross-chain Ethereum (ETH) bridged token fully backed with ETH held by ST for the benefit of verified holders of natively-issued ETHS tokens. ST is the CVC administrator of ETHS. Every ETHS token may be minted or redeemed 1-to-1 with ETH according to Stably’s terms and policies, minus fees, through a Stably Ramp account.
Stably reserves the right to deny, suspend or terminate any User’s usage of Stably Ramp, BTCS, ETHS, USDS and its white-label versions, if Stably deems it advisable or necessary to comply with applicable laws or to eliminate practices that are not consistent with laws, rules, regulations, or best practices.
Digital assets involve significant risks, including (but not limited to) market volatility, cybercrime, regulatory changes, and technological challenges. Past performance is not indicative of future results. Digital assets are not insured by any government agency and holding digital assets could result in loss of value, including principal. Stablecoins (e.g., USDS, USDC) and bridged assets (e.g., BTCS, WBTC) involve additional risks, such as technical challenges, security vulnerabilities, reliance on third-party custodians, and dislocation of market prices relative to the underlying collaterals. Please conduct your own thorough research and understand potential risks before purchasing/holding digital assets. Nothing herein shall be considered legal or financial advice. For more information about the risks and considerations when using our services, please visit stably.io/terms-of-service.