Almost 100 years ago, at the beginning of the twentieth century, people were able to exchange dollars for gold in a local bank. While trading gold has been very difficult among the people, banking institutions hold gold and give people cash for it. This was lower than what was known as the gold standard. Each sovereign currency was valued in relation to a fixed amount of gold. However, this criterion changed rapidly over the coming decades.

Towards the end of World War II, dozens of influential people organized a meeting to discuss a new monetary agreement aimed at minimizing the economic damage from the war. This meeting is named after the venue in which it was held: Bretton Woods, New Hampshire, USA.

It was a long-term plan of several parts, spanning decades. Bretton Woods decided that more fiat currencies would now be backed by US dollars rather than gold itself. Initially, the dollar was stable enough to support the 1944 Bretton Woods Agreement, but this did not happen in the following decades. During the Vietnam War, President Richard Nixon demanded more money. There was no more money in circulation. So he started writing.

In 1971, President Nixon eliminated the possibility of converting the dollar into gold, effectively ending the Bretton Woods agreement after nearly 30 years.

The abolition of the gold standard made each country’s paper currency a floating exchange rate that was no longer fixed. Money is no longer measured in dollars; Now every currency has been compared to another, with prices constantly changing, resulting in fluctuations in the foreign exchange market.

Bitcoin as opposition
Today, the fiat currency asset is measured in Bitcoin (BTC). As I mentioned in 2019, I believe Bitcoin is the best investment when it comes to healthy money currencies.

In some countries, such as Brazil, Argentina, and Venezuela, to name a few, bitcoins are currently at an all-time high when compared to the national currency. Relatively speaking, this is equivalent to the bitcoin price, which is already around $ 20,000.

The problem is that Bitcoin itself is not ready to be a cash system. Most people who have bitcoin hold it – they don’t sell it or use it as a currency due to the ability to quickly evaluate it despite its shortcomings.

Bretton Woods 2.0.1 update
Meanwhile, the International Monetary Fund is calling for a new Bretton Woods era to be declared in 2020. This will create the Special Drawing Right, or SDR, as the new reserve currency, not the US dollar. Special Drawing Rights are the most stable investment option for the International Monetary Fund. The value is made up of the five largest fiat currencies in the world as a hedge against volatile fluctuations in the foreign exchange markets. The problem with the SDR approach is that it can make the economic situation worse than it is today.

History has shown that when people have a great deal of power in monetary terms, they will wield it. Just look at President Nixon during the Vietnam War and the original Bretton Woods agreement in the mid-20th century. Worse, nearly all central banks are printing more money, which in turn leads to inflation as fiat currencies lose purchasing power.

We cannot have one strong organization that can write off temporary problems, especially if it gives us future debts that will be impossible to deal with. This is the opposite of democracy, where few people control big money decisions that affect everyone. Cryptocurrencies like Bitcoin seek to solve this dilemma through limited supply, among other beneficial traits inherent in blockchain technology.

Blockchain technology has a solution
Blockchain has raised our standards while waiting for the decentralization of our designated enterprises. True decentralization is achieved by breaking the hierarchy. Everything becomes transparent and incentives are presented to move the system in the right direction.

Sogur, for example, is a startup that is taking on the ambitious challenge of creating a new money system based on the cryptocurrency SGR that simulates SDRs, while using the blockchain and a smart economic system recommended by world-famous economists.

Love the idea of ​​coin curves which act as a more reliable and stable exchange tool. I don’t like the fact that the IMF has infinite decision-making power in our global monetary system. Blockchain solutions differ – they have a framework that is regulated by the association and can, for example, grant SGR holders the right to veto a decision at any time.

Blockchain technology can combine elements of decentralized governance into a classic corporate structure to comply with international money laundering laws and regulations, leveraging the contract-based smart bond curve to reduce inflation and volatility.

Source: CoinTelegraph