Why many are transitioning to cryptocurrency

MoneyBlocks
3 min readJul 10, 2018

In a world filled with payments using credit cards and dead presidents on pieces of paper, why choose digital code for currency when it isn’t backed by anything?

To understand the rationale behind investing in cryptocurrencies, we must first dissect the broader macroeconomic picture.

The world’s economy runs on a fiat-backed monetary system equivalent to quadrillions of USD. However, only $36.4 trillion USD of it is in physical form, also known as “narrow money” that includes bank notes and coins deposited in checking and savings accounts. If you consider the “broad money” (which includes the totality of assets that households and businesses can use to make payments or to hold as short-term investments such as currency, funds in bank accounts and anything of value resembling money*), the total is around $90.4 trillion USD.

But we’re just getting started.

The money invested in derivatives is at least $544 trillion USD with some estimates at $1.2 quadrillion USD. The stock markets, in comparison, contain a measly $73 trillion USD. Furthermore, commercial real estate investments are nearly $30 trillion USD.

On top of that, total global debt totals about $230 trillion.

Let that sink in.

In contrast to the quadrillions held in the fiat monetary system, the cryptocurrency system is in its infancy at around $250 billion at the time of writing.

Current money is inflationary

These astronomical numbers for fiat currency will only increase from here on out as central banks around the world continue to print more and more currency in addition to the currency that is issued in digital form. This tactic is used to cover the overwhelming amount of debt and keep the fiat economy running. However, the rate of expanding debt is much higher than the rate of inflation. If central banks truly wanted to print enough to cover the debt, the world would enter hyperinflation to the likes of Venezuela and Zimbabwe.

Hard assets have a limited supply

The reason why many intelligent and wealthy people store their money in hard assets such as precious metals, real estate, commodities…

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MoneyBlocks

The future is crypto. Twitter: @moneyblocksio BTC: 14AqCaNMRbnASw9hVPpd3kSa8Ze16GPxUs ETH 0xC549555c14Fbb521e46004164814538115E232EE