In the crypto scene, the Knowledge of how Bitcoin is created is a widely used, relatively far. But how it looks with the Euro? How, exactly, our law is drawn tender and what are the effects of this? This matter is currencies in the world of Crypto only relatively rarely touched. So here is the crypto – money creation – the Mining of the Emergence of the Euro is to be compared.
Anyone who deals with Bitcoin, will deal relatively early on with the theme of the emergence of the digital currency: the mines of new blocks of Bitcoin, the Block Reward will go to those miners who could calculate as the first of the new Block. Far less is known, however, how exactly is the Euro.
In our everyday life it makes no great difference whether we keep a Euro in a bar or on the account. For the banks and the state, however, a Euro is a Euro, There are three different Ways, as a Euro.
For the state and the banks, a Euro is not equal to a Euro
Our currency is generated in three different Ways.
The coin money is a purely government money: It is dominated by government mints, and in the circulation. The profit between Prägekosten and the nominal value of the coins, funds flows into the state.
Paper money, i.e. banknotes are printed by the Central Bank. This gives the money to the commercial banks, which can bring about the to us well-known ATMs in the circulation.
The third Form of the creation of money is a special case: the scriptural money. These are the digital Euros in our accounts. Money with about 86 percent of the circulating money supply in the Euro area the largest part of the payment.
The money creation: From 2,50 Euro commercial banks will be able to create 100 Euro
This money is not generated from a state or public Institution, but by the commercial banks in the Form of loans in circulation. Every Time a credit is taken, creates the Bank in new money. You can’t draw, although endless financial resources, but to produce 100 euros in demand deposits, you need only about 2.50 euros in”Central Bank money”.
(The Central Bank may seem to have money either in the Form of money or as a digital “Central Bank money” – which is a special form of money – to the banks to lend).
About the potential impact of a global Bitcoin usage as a means of payment can of course only be speculated. Nevertheless, the thought experiment is to be daring here and the possible advantages and disadvantages of Bitcoin and the Euro, which are already enshrined in the creation of money to be made.
A limited amount of money vs. infinite amount of money: No Bank bailout more because of Bitcoin?
By the nature of the money added the Bitcoin to its maximum the quantity of money is determined from the outset to 21 million Bitcoin. Of course, such stability and there is no danger of a loss of purchasing power due to an expansion of the money supply. However, no large amounts of money can be created out of Nothing. It should come to shortages in the supply of money, could not be supported the economy through the creation of new financial resources. Banks and Euro bailouts would probably no longer an Option. Since this type of the money supply, however, is based mostly on debt, could be prevented to be applied to massive debt by the creation of money, as the Bitcoin.
A zero-sum game vs. Plus-sum game: you Can quit Bitcoin the sovereign debt crisis?
In particular, money creation is the problem: If a majority of the Euro money supply by lending into circulation, are based almost all of the outstanding Euro debt. This must be sooner or later returned to pay. As soon as this would happen, there would be virtually no more Euros in circulation. The total amount of money, in the sum of the debt. Therefore, one speaks here also of a zero-sum game: Charged to all Euros with all the debt in the Euro area, the sum is Zero.
In practice, however, things are different: Since all the loans with interest and compound interest to be awarded, there are even more debt than money in circulation. The debt can never be repaid – except by the Recording of new debt with new interest. This can have devastating consequences, since it sets forced the industry to steady Growth, in order to serve the ever-growing interest.
The Bitcoin is not created by debt, therefore, you can refer to him as a Plus-sum game. The Problem referred to arises thus in the Bitcoin. On the contrary, Should the Bitcoin global acceptance, it could even contribute to put an end to the global sovereign debt crisis. It could be support about the debt that you could otherwise have to pay back due to the Emergence of the Euro, never, now in the Form of Bitcoins.
Deflationary money vs. inflationary money: Inhibits Bitcoin economy?
The individual investors would, of course, about money is always valuable, as it is in Bitcoin due to its artificial shortage to 21 million units tends to be the case. Whether this is as a General economic currency, however beneficial, is another matter. Because money is always worth more, is less spent and more hoarded. And the economy is of course reliant on a steady flow of financial resources. The Euro with its slightly inflationary trend invites more likely to be spent and could, therefore, be the overall economy as a means of payment makes more sense.
It makes it also for Central banks, meaning the benefits of crypto-currencies, a closer look at, to accept the potential benefits in a Reform of the monetary system. Not for nothing, there are always ideas on how the state’s crypto money could be implemented.
May be this can make a valuable contribution to unite the advantages of both systems in the cryptographic money.