Topic: How would digital currencies change over time? (Read 134 times)

Assuming that one currency doesn't become a perpetual digital currency, how will digital currencies change over time?

E.g. when Germany moved from marks to euros, people were able to change their marks to euros at a plausibly fair exchange rate so that they didn't lose out.

Digital currencies are decentralised. So, if digital currency X loses market share and is supplanted by digital currency Y, then all that will happen is that the value of Y will rise, and X will fall. So, people holding X will have lost their value.

This means that anyone holding digital currency does not know that in the long term it will have any inherent value at all. It could become valueless, and those involved in mining could switch to other currencies, making it useless.

People holding X can only exit by selling their X to other people. So, if a currency did fall out of favour, someone would have lost value. This value transferring to the early adopters of Y.

Real currencies can become valueless, e.g. the currency of Zimbabwe. However, this is quite rare.

My concern is that it is to the financial movers and shakers' advantage if currencies wax and wane, as this gives the opportunity for people to make money on the fluctuations in value as X depreciates and Y appreciates.

Of course, with more than two currencies on the market, it's likely to be even more complicated than that. But, I think the example above is sufficient to illustrate my question.