I live in Italy, we use euro but this is creating many problems and many people would like to go back to previous national currency. Since there are different economic going at different speed with a single currency, this make problems.
Now, think this problem in a much bigger context. 1 dollar in USA has not the same value of 1 dollar in China or Burundi. Since they have different economies, same amount of money has different value.
How could this be solved if in theory all world used bitcoin? how much would 1 Btc buy in Africa and how much in USA?
Now, think this problem in a much bigger context. 1 dollar in USA has not the same value of 1 dollar in China or Burundi. Since they have different economies, same amount of money has different value.
How could this be solved if in theory all world used bitcoin? how much would 1 Btc buy in Africa and how much in USA?
This is an interesting topic. Here is my understanding, it correlates with the gold-backed monetary system before Nixon took the US of the gold standard.
We'll use the US and China as the only two countries and pretend that the only products produced and consumed are electronics. The world economy is a complex system but lets keep it simple for argument sake.
Let's say that 1 unit of a an electronic, say one 16 gb usb costs 1 btc to produce in China and they sell it for 2 btc in China. Now the average salary for a Chinese person, in China, is 100 btc. In the US on the other hand, it costs 10 btc to produce a 16 gb usb and they sell it for 20 btc but the average salary for a US citizen in the US is 1000 btc.
Before this point, we can pretend that China and the US have a total supply of bitcoin of 10 000/100 000 respectively. We will also say that before this point the only trade that existed was from within their own country (no international trade).
From here, international trade is allowed. Ignoring shipping costs and bulk orders, it will be obvious that the people in the US will now start buying their 16 gb USBs from China, it is 1/10 of the price! lets say over 1 year, 10 000 USBs that would have been bought in the US by the Citizens in the country, were imported from China. We now have 20 000 btc leave the US and enter China's economy. China now has 30 000 btc floating around and the US has 80 000. Now some people in China are getting richer and spending more, so over time, this money starts to distribute itself through the Chinese economy making everyone that little be richer. Due to this fact, over time, the price of everything will increase, including salaries, products, labor etc. This won't happen all at once and will be unfair to the last people that see the benefit to this increase in total btc in the economy but hey, that's just trickle down economics.
Now, if this pattern continues, eventually there will be more btc in the Chinese economy than in the US economy and eventually the prices of 16 gb USBs will catch up (along with everything else). While all of this is going on, the US economy is losing btc, so the exact opposite will happen. Based on 1000000 variables, the simplest result of this will be that the US citizens will suddenly realize that 16 gb USBs are now 1/10 of the price of Chinese 16 gb USBs. They will start buying locally and the exact opposite will occur, causing the Chinese to buy from the US (change from exporting to importing). This cycle will continue forever due to the limited supply of btc, much like gold. It will be much more effective and easier for this to happen than gold due to btc's unique properties.
This is what was suppose to happen with gold but when the US had a large percentage of it and should have started their decline, therefore going into a recession, they got scared and screwed the world over, prolonging their recession and therefore making it exponentially greater when it does happen. Bitcoin could prevent this scenario from happening again, due to the internet and again, btc's properties.
Obviously, this is an extremely simple example and the real economy is not only much more complicated but much more complex.
Another note, I also think that due to the advances in the world today, there could be like 'hotspots' for certain industries that will always thrive due to their environment and location. Many industries will always go back and forth though.
