It’s safe to say that a substantial number of bitcoiners support the concept of competing currencies. Whether it’s backed by a computer algorithm, precious metals or nothing at all, healthy competition in the world of currencies could benefit consumers more than hurt them.
This is what Kim Dotcom’s Internet Party in New Zealand wants. The political party wants two things: a government-backed cryptocurrency and for it to operate alongside the New Zealand dollar. The general consensus in the land down under is that the proposal won’t go very far.
Internet Party chief executive Vikram Kumar, who released the platform last week, said the basic concept is “sound” and it is “safe, secure and encrypted.” He argued, though, that a fiat-backed digital currency could be more legitimate, trusted and prone to traditional policymaking decisions akin to monetary policy at the Reserve Bank of New Zealand.
A possible fiat virtual currency could also assist consumers by paying smaller credit card and transaction fees. There would be other benefits, but declined to comment further and dismissed claims that it would simply duplicate the present system.
To be safe, Kumar noted that the digital currency would not evade the tax system.
“It would just be treated as we would normal transactions. Whether a transaction happened in New Zealand dollars, U.S. dollars, bitcoins or any other digital currency, we should focus on the transaction and include that in our taxation systems,” said Kumar.
The important question is this: why would any political party want another currency backed by nothing? It has been decades since any country maintained any sort of gold standard or commodity-backed currency. If any person, organization or movement wanted a legitimate currency to compete against a nation’s preferred choice of currency then why not impose one that is sound and follows the characteristics of money supported by gold and silver?
Indeed, the New Zealand dollar is one of the most stable currencies in the world today and has maintained its value quite well, even during the global economic downturn. However, it’s still important to remember that pieces of paper are not real money.
Gold is a 6,000-year-old currency that has been utilized by civilizations worldwide. Paper money is a decades-old experiment that has been used by governments to expand the power of the state, pay off corporate cronies and fund wars, whether just or unjust.
Here is what Austrian economist Murray N. Rothbard wrote in “The Case for a 100 Percent Gold Dollar”:
“Having decided to return to a 100 percent gold dollar, we are confronted with the problem of how to go about it. There is no question about the difficulty of the transition period required to reach our goal. But once the transition period is concluded, we will have the satisfaction of possessing the best monetary system known to man and of eliminating inflation, business cycles, and the uneconomic and immoral practice of people acquiring money at the expense of producers. Since we have many times the number of dollars as we have gold dollars at the present fixed weight of the dollar, we have essentially two alternative, polar routes toward 100 percent gold: either to force a deflation of the supply of dollars down to the currently valued gold stock, or to “raise the price of gold” (to lower the definition of the dollar’s weight) to make the total stock of gold dollars 100 percent equal to the total supply of dollars in the society. Or we can choose some combination of the two routes.”
Replicating the bitcoin model may allow early adopters a route to a quick dollar, but a gold- or silver-backed currency can offer true long-term currency viability.
