Two misunderstandings of digital currency

Nov 16, 2021 By Edgar T Reeves

Where does the currency come from? In short, it is a product of demand, supply is secondary. Technology- can change the appearance of money and improve supply, but it cannot create demand, so it is usually more secondary. The core of the currency economy is demand. Going outward is the supply, and going outward is the indispensable technology. The unity of currency, in form, is often embedded under external forces. In fact, it is still determined by demand.

Does the digital community determine the demand for digital currency?

Digital currency is a product of the digital economy, and it occurs and develops to meet the needs of the digital economy. This seemingly simple truth is often distorted in practice, making digital currency the product and service of the digital network community. In this way, community activities are equated with economic activities, and the digital community itself is equated with the digital economy. Furthermore, communities can issue digital currencies regardless of their size. If there is no community, currency can also be issued through newly established communities. As it develops, everyone can issue coins, and community coins have become popular and popular: those mega-communities are sought after and seek to issue super-large digital currencies. As a result, Facebook, with 2.7 billion users, seems to be able to realize the digital unification of global currencies in an instant by issuing a digital currency named Libra.

As we all know, the specific positioning of digital communities is different. There are social platforms and shopping platforms. Amazon is the online shopping giant, of course, there are ticketing giants, distance education giants, and so on. However, to this day, not only has there been no all-encompassing super community, but also no all-encompassing economic community.

It is true that the economy and society have not appeared, nor do they expect to appear, an industry-wide digital economy giant. Since the representatives of the digital communities feature different community activities and are independent of each other, it is difficult for the digital currency of each community to naturally circulate to other communities and develop into digital currency. Therefore, even if a community currency realizes cross-border circulation, it is still difficult to realize cross-community circulation.

Digital currency should not be limited by the community. The competition, cooperation, and mutual penetration of various community currencies will eventually form an overwhelming digital currency. What determines the future direction of each community currency is not the size of the super community, but the power of cross-community demand.

Does digital technology determine the supply of digital currency?

As long as the digital technology for issuing currency is sufficiently "advanced", building a community and issuing currency can be accomplished overnight. As a result, the existence, size, and maturity of the digital economy are all secondary or even negligible. This kind of understanding or stance is so inflated that it even declares that “there are no theoretical problems that cannot be solved by digital technology, let alone practical tasks that cannot be accomplished by digital technology.” As long as digital technology is in place, the digital economy will blossom and bear fruit, and digital currency will be popular.

With the development of "digital technology first, technology overwhelming everything and dominating everything", digital technology has been shaped as the fundamental force that dominates and even determines digital currency and the digital economy. Let it go, the technological language began to replace currency language, and technological logic began to ignore currency logic. Not only did "technology first" replace "community first", but technology determined supply and plan demand.

Such worship of technology reaches the "height" of faith, and it will inevitably become a technological determinist. Furthermore, consciously or unconsciously, the economy and society can be regarded as a piece of white paper, and the latest and most beautiful currency picture can be drawn. However, economic society has never been a blank paper, and currency has never been "the latest and most beautiful" and the best. No one doubts that Facebook has the technical capabilities or level of running the super-network digital community. In this way, there are many people who believe that Libra can fundamentally subvert currency language and currency logic.

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