How Jinbi Have Fixed the Problem of Crypto’s “Real Worth”
Ever since the birth of cryptocurrencies with Satoshi Nakamoto’s now fabled Bitcoin, the general public have been asking “how can it hold any value?”
Please Note: This is a Press Release
This can seem like a fair question. With normal fiat currencies such as the US dollar, Great British Pound or the Euro, their value comes from two places.
The first is that the government guarantees its use. If you need to pay your rates or a fine etc. the law provides for the fact that you will be allowed to pay in your country’s local currency. The second is their level of adoption. Similar to the first point, the government provides certain guarantees about the money which ensures that it continues to be the predominant form of exchange.
With everyone in the country using a particular currency, say the US dollar, you can be certain that it’s going to maintain a fairly consistent value. For example, if 10 million people around the country paid $4 for a cup of coffee yesterday morning, you can be sure that $4 today will still be worth a cup of coffee. Depending on where you purchase of course.
Cryptocurrencies are quite different
Let’s relate them to the examples above.
You can’t pay income tax, property tax, capital gains tax, fines or even roadway tolls with Ether. Because of this, you can’t be certain that it will remain in circulation to the extent that it currently is. (It probably will, but that’s not the point). Secondly and closely related to that first point, is that circulation is not high enough and not enough vendors accept Ether, that it’s value might not be consistent. If only 100 people around the country bought a cup of coffee yesterday morning for a certain amount of Ether, today the seller might decide that because of its price fluctuations and because they can charge a premium for accepting crypto, that you now need to pay an extra 30% for your morning cup of joe.
Ether, Bitcoin and Litecoin have grown to the point where instances like that are unlikely to happen, but still possible. I know of some people who were buying coffee daily in Vietnam with Litecoin in December of 2017. LTC is now worth half that much. Is it likely that the coffee shop will still be charging the same amount? I doubt it.
We can see that without the government’s guarantee that a currency will always be accepted and at a constant rate, combined with low circulation, that the underlying glue that holds value together, isn’t quite present for crypto.
Who knows when cryptocurrencies will see mass adoption, if at all and whether they could ever outgrow a fiat currency.
What we do know however, is that there is already a solution to the problem.
It wasn’t that long ago in the context of world history that we were still using gold to trade and barter. The inconvenience and poor security of carrying around bullion, on top of the fact that many people would shave the edges off of gold coins, meant that a new system had to be devised.
Banks stepped in with the answer. If you had $10 worth of gold saved in the bank, you could write a promissory note to a seller and he could take it to the bank to collect the gold.
With government involvement and widespread use of promissory notes, the dollar had soon grown to the point where its level of circulation meant that it no longer needed to be attached to the gold.
As we know, cryptocurrencies aren’t yet at that level.
And Then Came Jinbi
Jinbi has a two faceted approach.
For starters, they make the buying and selling of gold, a very simple and secure process. They have a supply chain and buying mechanism that makes it easy for anyone around the world to buy gold.
With that system in place, they have also fixed the problem of cryptocurrencies lacking intrinsic value. By using Jinbi, the ERC20 compliant token, you can know that the value of your coin will stay relative to the underlying asset of the gold, coupled with the ease of leading edge technology.
Blockchain’s promissory note for gold has arrived.