Although monetary units issued by the Federal Reserve of the USA carry many advantages for trade and serve as a global reserve currency, its existence is not without its imperfections. One of the main weaknesses of the USD (US dollar) is the Triffin Dilemma: A problem that arises when the country issuing a global reserve currency must deal with short - term objectives in the domestic economy on par with goals long term international .
Such a dilemma leads to trade deficits when they have to meet international demand for currency. Where the USD fails due to Triffin Dilemma, statelessness Bitcoin feature may be a promise to resolve the international monetary failure and to provide the infrastructure for a more independent global economy.
Economist Robert Triffin was the first to draw attention to this issue. Sending countries of an international reserve currency that other nations want to possess must be willing to issue a stock extra money to meet global demand. This situation inevitably leads to trade deficit .
In March 2009, in the middle of the recent Great Recession, the director of the People 's Bank of China, Zhou Xiaochuan expressed dissatisfaction with the current state of the global reserve currency. Known for his reformist tendencies, Xiaochuan made clear the need to create " one world reserve currency that is disconnected from individual nations ". Such an international reserve currency, he insisted, should be issued according to fixed rules and could provide a stable value.
Zhou Xiaochuan's proposal went largely unnoticed, and since then has not proposed any solution. While Tal may be possible that the non-state international currency reserves and has been circulating since 2009? Is it possible that the bitcoin, decentralized digital currency can serve as an international currency disconnected from individual nations, and thus solve the dilemma of Triffin?
John Nash and Triffin Dilemma
John Forbes Nash, the mathematician who died some believe is one of those who contributed to the invention of Bitcoin, was also a supporter of monetary reform to solve the dilemma of Triffin. The desirable goal in Nash's mind, was to create an international reserve instrument capable of operating independently to individual nations and remain stable in the long run by redressing deficiencies own money based on credit.
Such currency should be able to facilitate national saving while operating autonomously in a globalized world. With an obsessive focus on cryptography and ideal money, the introduction of Bitcoin bears traces of John Nash.
Can Bitcoin solve the Triffin Dilemma?
Triffin's Dilemma, in which the issuing countries of reserve currencies while trying to manage the levels of domestic savings and the necessary international liquidity remains, to this day, as a barrier to economic growth. In any case, could it be that the introduction of Bitcoin bring with it a viable solution to Triffin Dilemma?
If we assume that the prerequisites for a currency able to solve the dilemma of Triffin are the following, we can argue that Bitcoin is the perfect solution .
Stable value.
Emission based on fixed rules.
Default emission and known by all.
In a recent analysis of price volatility bitcoin, Eli Dourado believes that the stability of bitcoin could reach the Euro within about 15 years. Largely as a result of the increase in the number of active users -the Board of the Federal Reserve in Washington estimates that the Bitcoin user base doubles approximately every 8 months -.
The issuance based on fixed rules is perhaps the most interesting aspect of the Bitcoin economy. Here we have a paradigm shift in the management of monetary policy . Where central banks and human decision were the catalyst for the monetary policy of the twentieth century, that role is now taken by an algorithm that determines the issue in time.
Finally, the scheduled broadcast of bitcoins is relatively rigid compared to traditional forms of money. We know with a high degree of accuracy the number of bitcoins at any point in the past or the future. Peter Surda, an economist at Vienna, Austria, argues that the predictable issuance of bitcoins could result in reduced economic cycle domestically. This kind of monetary issue could allow both governments and businesses to anticipate changes with a higher level of precision and, therefore, could mitigate the destructive nature of the economic cycle.
According to Bitcoin gains new users in the form of individuals learning about cryptocurrency, making transactions with it, and crossing the psychological barrier of accepting it as a valid form of payment is much closer to its rightful place as an instrument of global reserves . Such an instrument would contain the tremendous potential to solve the old Triffin Dilemma.
Such a dilemma leads to trade deficits when they have to meet international demand for currency. Where the USD fails due to Triffin Dilemma, statelessness Bitcoin feature may be a promise to resolve the international monetary failure and to provide the infrastructure for a more independent global economy.
Economist Robert Triffin was the first to draw attention to this issue. Sending countries of an international reserve currency that other nations want to possess must be willing to issue a stock extra money to meet global demand. This situation inevitably leads to trade deficit .
In March 2009, in the middle of the recent Great Recession, the director of the People 's Bank of China, Zhou Xiaochuan expressed dissatisfaction with the current state of the global reserve currency. Known for his reformist tendencies, Xiaochuan made clear the need to create " one world reserve currency that is disconnected from individual nations ". Such an international reserve currency, he insisted, should be issued according to fixed rules and could provide a stable value.
Zhou Xiaochuan's proposal went largely unnoticed, and since then has not proposed any solution. While Tal may be possible that the non-state international currency reserves and has been circulating since 2009? Is it possible that the bitcoin, decentralized digital currency can serve as an international currency disconnected from individual nations, and thus solve the dilemma of Triffin?
John Nash and Triffin Dilemma
John Forbes Nash, the mathematician who died some believe is one of those who contributed to the invention of Bitcoin, was also a supporter of monetary reform to solve the dilemma of Triffin. The desirable goal in Nash's mind, was to create an international reserve instrument capable of operating independently to individual nations and remain stable in the long run by redressing deficiencies own money based on credit.
Such currency should be able to facilitate national saving while operating autonomously in a globalized world. With an obsessive focus on cryptography and ideal money, the introduction of Bitcoin bears traces of John Nash.
Can Bitcoin solve the Triffin Dilemma?
Triffin's Dilemma, in which the issuing countries of reserve currencies while trying to manage the levels of domestic savings and the necessary international liquidity remains, to this day, as a barrier to economic growth. In any case, could it be that the introduction of Bitcoin bring with it a viable solution to Triffin Dilemma?
If we assume that the prerequisites for a currency able to solve the dilemma of Triffin are the following, we can argue that Bitcoin is the perfect solution .
Stable value.
Emission based on fixed rules.
Default emission and known by all.
In a recent analysis of price volatility bitcoin, Eli Dourado believes that the stability of bitcoin could reach the Euro within about 15 years. Largely as a result of the increase in the number of active users -the Board of the Federal Reserve in Washington estimates that the Bitcoin user base doubles approximately every 8 months -.
The issuance based on fixed rules is perhaps the most interesting aspect of the Bitcoin economy. Here we have a paradigm shift in the management of monetary policy . Where central banks and human decision were the catalyst for the monetary policy of the twentieth century, that role is now taken by an algorithm that determines the issue in time.
Finally, the scheduled broadcast of bitcoins is relatively rigid compared to traditional forms of money. We know with a high degree of accuracy the number of bitcoins at any point in the past or the future. Peter Surda, an economist at Vienna, Austria, argues that the predictable issuance of bitcoins could result in reduced economic cycle domestically. This kind of monetary issue could allow both governments and businesses to anticipate changes with a higher level of precision and, therefore, could mitigate the destructive nature of the economic cycle.
According to Bitcoin gains new users in the form of individuals learning about cryptocurrency, making transactions with it, and crossing the psychological barrier of accepting it as a valid form of payment is much closer to its rightful place as an instrument of global reserves . Such an instrument would contain the tremendous potential to solve the old Triffin Dilemma.