Would you consider using a cryptocurrency or stablecoin to make transactions and not simply as an investment?
Learning Goal: I’m working on a management writing question and need an explanation and answer to help me learn.
In Chapter 5, the authors describe the historical evolution of the market-based economy in the US. They note that the Federal Reserve system for central banking was not established until 1913. During the 19th century, many individual banks would issue their own paper currency (bank notes) that were exchangeable for gold or silver. The paper notes were more convenient to use than metal coins, so they were widely circulated in the economy. At the peak, more than 7,000 different institutions issued bank notes. The key disadvantage of this system was the potential for financial fraud and counterfeit notes. Accordingly, some people would not accept notes issued by unfamiliar banks, which hampered the pace of economic activity.
Today, we have a similar situation in the cryptocurrency and stablecoin markets — there are thousands of alternatives, they have varying availability and features, and there may be substantial risks for people who hold these assets. Despite the growing interest in these digital assets, cryptocurrencies and stablecoins are not presently equivalent to established currencies (like the dollar, yen, or euro) because they are not widely used for transactions (i.e., not universally accepted as a medium of exchange) or exhibit wide fluctuations in value (i.e., not a stable store of value). Would you consider using a cryptocurrency or stablecoin to make transactions and not simply as an investment? Would you accept payment in the form of Bitcoin or some other cryptocurrency or stablecoin? Would your opinion change if the digital currency was backed by a central bank like the US Federal Reserve or European Central Bank?
[Your post must be substantive and demonstrate insight gained from the course material. Postings must be in the student’s own words – do not provide quotes!]
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