Cryptocurrencies as a unit of account

Las criptomonedas como unidad de cuenta

With the creation of cryptocurrencies, a financial management option is generated that is very different from the one traditionally managed by economies in the world.

The unit of account is a unit of non-physical existence value (that is, it is not physically coined), which, despite being intangible, is used in commercial transactions and assigns the necessary representative value in the establishment of a negotiation.

The value of a product marketed in a market that uses a currency is adjusted by who sells it using a unit of account, in the same way as it was done in a barter market, since the value of this product is given by the characteristics and conditions established by its producer or owner.

When analyzing what is the value of money, we determine that it is given by the acquisition capacity of it, and that the support of the money that is in circulation is given by what the person who generated it has assigned it at the moment of creating it, that is, if the monetary unit in a country is pesos, what supports each peso that circulates in that country? In theory, the money circulating in pesos in that country is backed by the reserve of gold that it has, in theory each peso costs its value in gold, which is unlikely nowadays, since no country has that reserve of gold in existence. But even so, this credible support is what gives value to that currency.

With the creation of cryptocurrencies, an option for managing financial values ​​is generated that is very different from the one traditionally handled by economies in the world, and the most recognized of these cryptocurrencies, Bitcoin, has come to question what is the future of the world’s monetary economy.

How is it possible that a virtual currency, without a physical existence, without financial backing, can be used on such a large scale to carry out transactions, investments, and produce such an effective return? The answer is that, if we think about it, there isn’t a big difference between real money and cryptocurrencies, just the fact that real money can be physically managed.

The acquisition capacity of a real currency and a cryptocurrency doesn’t represent great differences, since its value, like the physical money, is affected by its movement in the market where it is used and, both of them have been designed to function as means of exchange, being physically palpable and the other a digital or virtual creation.

But even so, ordinary citizens who move in the market of financial or commercial transactions are interested in having their monetary possessions supported by a physical product, an object existing in the material world, as supposedly happens with money, to feel more confident when making their investments, which continues to be a brake on the evolution of the use of cryptocurrencies.

Added to the most recognized cryptocurrencies in the digital market at present day and perhaps the most recognized ones, such as Bitcoin, Ethereum or Litecoin, there is a large number of cryptocurrencies created by different private and government entities in order to venture into certain markets to digital level and allow the commercialization of their products or actions by these same means, to which they have given a material endorsement, examples of this are:

  • The Agrocoin, backed by habanero peppers. Mexico. Marketed by the firm Amar Hidroponia.
  • The Bilur, backed by stored energy units. London. Developed by R.Fintech.
  • Inncoin, backed in gold. USA Developed by Anthen Vault, leading distributor of gold bars.
  • Royal Mint Gold, backed in gold. United Kingdom.

And so there are many more that have shown that the digitization of money represents the financial future worldwide, but also the fact that the trust that is placed in money is not given by itself, but by how it is supported, or by the capacity of acquisition and mobilization that it possesses.

Until very recently, negotiating with cryptocurrencies was quite difficult, since the lack of knowledge about it generated mistrust among the merchants, especially in the very traditional ones. Nowadays, the situation is completely different. There are many areas of general trade that manage their businesses in the network or outside it, having Bitcoin as a form of payment. This evolution has given credibility to the cryptocurrency in the market and that it can currently be used to pay in hotels, restaurants, bars, commercial premises, even university degrees. Added to this change is the fact that the giant Apple has authorized at least 10 cryptocurrencies as a viable payment method in its App Store and even more so the existence of a large number of ATMs dedicated for the cryptocurrency all over the world.

But undoubtedly, the creation of cryptocurrencies and their constant evolution leads us to refer to them as a new unit of account, as it is an intangible item that is valued or devalued, without having a material support equivalent to its value in most cases. Rather than being precisely innovative and greatly facilitating the performance of digital transactions, cryptocurrencies receive a value backed by the capacity of acquisition of goods or services and by their capacity to capitalize and negotiate in digital markets, which is undoubtedly the vision of the financial future we are facing.

Previous articleNext article