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DOES. Hayek is known for his work that led him to become a Nobel Prize. The economist discussed a solution to the state of inflation created by the government of the 70s and the subsequent recession, along with the problems it encountered. This solution would imply a form of private and irredeemable money that would have enough power to compete against the Fiat. He described in a book entitled "Denationalization of Money". Even decades before the idea of digital money could even have been a concept, Hayek had already planned such a resource.
In a recent article by William J. Luther, who is currently the director of the Sound Money project of the American Institute for Economic Research, he spoke about this vision, linking it to the cryptocurrency. He commented that only the concept of crypto alone would be along the lines of what Hayek had described, and how the critics of this type of plan were somehow correct, as an incentive to inflate the currency.
Cryptocurrency on a blockchain eliminates concern for this type of concern and the fixed issue that can not be changed by a single entity keeps it honest. The only way Bitcoin can solve inflation is with every single participant participating, which is a circumstance that happened earlier on the blockchain in August 2010 with a difficult fork. However, individuals on the side of the chain who were not victorious were eventually persecuted.
Just as Hayek thought, the alternatives that had not been ruined would be those that benefit from the move. Again, Monero and similar coins could come out victorious, since they have a certain level of predictability. With this private money market, which offers participants many options to adapt to what they want, Bitcoin now has an incentive to stay with the original plan and keep the network functioning properly. However, others may use this as a way to encourage them to pursue other attempts to create the effect.
Luther wrote: "In a sense, cryptocurrencies have put Hayek's mental experiment into practice.The privately issued cryptocurrencies compete directly with the money emitted by the traditional government, unlike gold. silver and salt, cryptocurrencies like bitcoin, ether and dash do not have an obvious non-monetary use, they are not commodities, nor are they redeemable for goods, rather they are issued by private funds irrecoverable, just as Hayek had imagined. "
However, Luther notes that there is a problem with cryptocurrency: they lack "stable buying power". The volatility of the market alone makes it difficult for anyone to predict what monetary value the assets are redeemable for, which means they are (at best) speculative. While stablecoins are becoming more and more popular, they are primarily meant for the trading process, rather than for use in a spending capacity.
When it comes to substantially reinventing the economy and returning from wrong political decisions, cryptocurrency has yet to make much progress first. Stable purchasing power is a necessity for this, as it must be applicable to activities such as grocery store purchases and bill payments. The potential for future changes does not actually help the problems in the meantime.
Luther concludes that, in essence, the only thing the crypto community must do at this point is experimenting and continuing to make progress. He notices,
"Hayek was clearly on something with potential when he proposed to allow private alternatives to poorly managed government funds, but as Hayek has written elsewhere, competition is a process of discovery: we have to make it work to reveal what types of money people want to more and the best way to supply them, as cryptocurrency pioneer Nick Szabo wrote, unresolved questions about cryptocurrency "can only be solved by putting them into practice and seeing how they work in practice".
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