I found this a very interesting read,
Bitcoin, other alt-currencies offer more choices for consumersU.S. government policies over the years, starting with the National Banking Act of 1863, a law intended to help finance the Civil War, have established a near-monopoly for the U.S. government over how people may pay for things they want.
By compelling everyone to use the one-size-fits-all government-backed currency, consumers’ options are reduced, neglecting their actual needs. The rise of alt-currencies is an attempt to fill that vacuum.
A recent paper by Kenyon College economics professor William Luther explains Bitcoin and other virtual currencies are already serving consumers better than government-backed money.
“The most likely place for a cryptocurrency to accomplish widespread acceptance would seem to be where the incumbent money is managed poorly since, in these cases, the benefits could be sufficiently high to warrant the costs of switching and coordination,” Luther wrote. “In Kenya, where many are unbanked but have cell phones, Vodafone’s m-pesa system has taken off. If the incumbent money were especially unstable, such users might opt to use their phones to transfer cryptocurrencies instead.”
Allowing alternative currencies to arise and evolve in the United States could have huge economic benefits. In a study on how the Federal Reserve’s money monopoly affects the U.S economy, Thomas Hogan, an assistant professor of economics at West Texas A&M University, writes, “Considering that banks issuing private notes in Hong Kong, Scotland, and Northern Ireland earn hundreds of millions of dollars annually, it appears that U.S. banks may be missing an opportunity to earn billions of dollars in annual profits.”
Regardless of whether the currencies are digital or physical, allowing consumers to experiment and try out new currencies offered by private entities ultimately results in a better “product” and a better experience for consumers seeking something different than the traditional government-backed dollar. In time, currencies possessing more qualities desired by consumers, such as reliability, will gain greater consumer adoption, and those currencies will win out over less desirable alternatives.
Ending the U.S. government’s virtual monopoly over the money business and allowing free-market principles to do their thing, both online and in the real world, is an idea that’s sure money.