Talk for Article "Why digital money is here to stay"

Talk about this Article

  1. [ This comment is from a user you have muted ] (show)

    Hi there, just some comments as the title caught my attention.

    Isn’t the title a bit misleading? The ‘essay’ seems to point out what digital money is in the form of cryptocurrencies, but doesn’t give enough valid points why there are here to stay. At the end in a small paragraph points out that the price will probably not going to go to zero if enough investors stay around.

    It would need stronger arguments to indicate that digital money is here to stay.

    One idea, could be, to indicate the natural progression of money and why money till now where issued by a centralised authority and it kind of makes sense in the future to have the most trusted way of issuing money that have value.

    For example in the past we had to associate paper cash with an tangible asset like gold, but money has evolved to become digital where big corporations and institutes have controlled where the money flows and this was a problem in various ways. It seems a natural progression to have money that are decentralised and public or even decentralised but privatised (offering a certain incentive) and thus will give people the choice on how they will exchange goods, especially in third-world countries that have no or limited financial infrastructure but have mobile devices.

    The technology still has room for improvement but if something is exchangeable people might start using it as a form of money and give their own value to it. (

    To conclude the article didn’t convince me why they are here to stay. There is a fundamental reason why decentralised or even centralised digital cash would be better in the long run but the important aspect (since this is inside cryptocurrencies) would be to give socioeconomic and a bit more well rounded reasons reasons why digital money is here to stay.

    Just my thoughts, ignore me if I am wrong.

    1. [ This comment is from a user you have muted ] (show)

      Actually, you’re not the first person who tells me the same thing (that the body doesn’t match the title) and I’m struggling to determine why people say so. I mention it clearly that digital money has been around for decades and governments are even preparing to launch their own second generation digital currencies (crypto-currencies). If physical cash is becoming a thing of the past, isn’t this an indicator that digital money is here to stay?

      Re-reading your commentary and others again, I’ve just realized that I’ve not made a clear enough distinction between digital money in general, and a specific variant of it, which is crypto-currencies like Bitcoin et al. I make it sound like they are the same thing. But when I say that digital money is here to stay, what I really mean is that all money is going to end up in digital form. This claim shouldn’t be read me suggesting that Bitcoin et al. will be it (my personal opinion is that it’ll disappear).

      The whole article meant to dispel the myth that Bitcoin et al. is digital money while regular currencies are not. The original title was: “get used to it: digital money is here to stay” meaning that it doesn’t matter what happens to Bitcoin et al., digital money is the future.

  2. [ This comment is from a user you have muted ] (show)

    Minor typo – you need to close bracket after currency A and B description. I’m a lecturer so after years of marking, am super sensitive to punctuation!

    1. [ This comment is from a user you have muted ] (show)

      And your help is greatly appreciated. I think I closed the bracket and someone removed it, though. I’ve noticed it happen more than once.

  3. [ This comment is from a user you have muted ] (show)
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      I’m well aware that McAfee is pumping Bitcoin, he is probably an early adopter and trying to pump his own coins. In the context he is quoted on, he serves the purpose of illustrating one extreme very well. The other extreme, as I mention, is those who accuse crypto-currencies of being Ponzi schemes. If we accept that, we’d have to launch the same accusation on central banks for issuing currencies with no intrinsic value and pumping its value with a legal monopoly.

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    It might be helpful to raise the issue of the future of encryption, given the rapid development of quantum computing, and how it might affect cryptocurrencies.

    1. [ This comment is from a user you have muted ] (show)

      99% of the time you hear quantum it’s used as a buzzword. But it’d be worth investigating.

  5. [ This comment is from a user you have muted ] (show)

    Hi Miguel,
    Thanks for the essay which I enjoyed. Whilst the topic is clearly digital currencies, it may also be worth mentioning that blockchain or DLT can be used in many other applications (such as smart contracts), so whilst Bitcoin itself may well be flawed it really is only a proof of concept. I would also suggest that the wild fluctuations of value and current speculation are valuable in teaching the builders of the next generation of cryptocurrencies how to build a little more stability into the design (Fiat has been around for centuries but can still suffer from this, but national banks have learnt how to mitigate matters in most cases).

    1. [ This comment is from a user you have muted ] (show)

      You’re right. In the story I mention that Blockchain is a distributed database, perhaps it’d be useful to mention that it can be used for other purposes. Actually, the crackdown on crypto-currencies is not targeting Bitcoin in particular but a business model called initial coin offerings (ICOs), which is basically a capital raising model parallel to the stock market. People create a new coin, keep coins to themselves from the start, and sell them when the price rises. From what I know Satoshi Nakamoto did the same and has about 7 billion.

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        The crack down appears to be focused on both ICOs as a security and outright ponzi scams (see: Bitconnect — Bitcoin, as of now, appears to be headed towards government regulating the flow of money as it relates to their fiat currency.

        Also, to correct you about Satoshi, they did not “create” new coins, but mined them, in accordance to the system. Satoshi just so happened to mine a lot before many even knew about Bitcoin and are believed to hold around 1million Bitcoin — though there is no official numbers as we do not know who/what Satoshi is. This is the closest anyone has attempted to locking down Satoshi’s holdings (

        1. [ This comment is from a user you have muted ] (show)

          Bad wording, I meant a new crypto-currency and keep some of the coins for themselves. I’m not saying they magically “create” them, but they use privileged information of some sort to leverage themselves. Good call, I’ll update the article later. Thanks.

  6. [ This comment is from a user you have muted ] (show)

    “Paper money and metal coins are also issued by governments”
    More accurately they are issued by central banks. While they are for the most part government owned, their exact relationship to the government varies. One of the major reasons for having a central bank manage this aspect is to keep politics out of it. Since the term ‘government’ is strongly associated with politics I think this could be misleading.

    1. [ This comment is from a user you have muted ] (show)

      I can change it for central banks, no problem. But the currency still circulates under a legal monopoly and is technically part of the government.

  7. [ This comment is from a user you have muted ] (show)

    Thank you for your feedback. I reworked the whole story. I hope this is a compromise between my original style and yours.

  8. [ This comment is from a user you have muted ] (show)

    Miguel, I’m just going in to edit your piece. I’ve changed it from “Explainer” to “Essay” for now since the piece reads like an editorial. I’ve made comments on the piece for your consideration, too. You clearly know a lot about the topic, but some of the sections are highly complex for a reader who may be coming at it with fresh eyes, hence me simplifying it. Certain terms should always be explained, like blockchain for example. Looking forward to collaborating with you. Thanks, Linh

  9. [ This comment is from a user you have muted ] (show)

    I’m not sure how the main body of this piece fits with the conclusion. It correctly points out that the bubble will burst but overlooks some of the most pressing concerns around using cryptos as currency such as the ever increasing transaction fees. It currently costs me $6 to transfer money to Europe and $25 to buy goods using Bitcoin. It also mentions that trading encourages people to gamble but in the context of ‘fiat’ vs. cryptos I’d love to see instances and protections against, say, wash trading between the two financial systems. You raise a very good point about most money being digital now – but I would also be interested in seeing a comparison of the distribution and storage systems set up to support fiat currency vs. the blockchain-dependent cryptos. I think comparing the two systems is a great idea and having an essay around the important differences between the two and perhaps the immediate future is also brilliant. Would love to read more about it.

  10. [ This comment is from a user you have muted ] (show)

    You are correct in thinking that low or nonexistent transaction costs are an attraction for a digital currency, but remember that is only going to be true during the mining phase. Once all 21 million bitcoins have been mined then the currency can only continue to operate if the transaction costs are sufficiently high to reward the former miners who are now just transaction processors. There is a very real possibility that Bitcoin will fail at that point if not before. Also it is incorrect to say that national currencies have nothing backing them. National currencies are backed by national governments. Governments with the ability to levy taxes…….. OK sometimes governments get into financial difficulties and even like the Confederacy cease to exist, but that’s why the Swiss Franc is such a strong currency and some other currencies so weak. Bitcoin has nothing backing it and no guarantee that it will be worth anything in the future.

  11. [ This comment is from a user you have muted ] (show)

    I agree and that’s why I don’t really care much about Bitcoin myself. As an experiment it absolutely succeeded, but its design is fundamentally flawed and will not be useful in the long term. I don’t think I understand you about governments backing money up. Money used to be a reference to real wealth (traditionally gold and silver, but it can be anything) that you were able to withdraw at any time. A sort of cheque. Now money makes reference only to itself. As I mention in the article, governments only ensure a legal monopoly (and thus, demand for the currency) to prevent wild fluctuations in its price. However, this mechanism quickly loses effectiveness with the circulation of parallel currencies.

    1. [ This comment is from a user you have muted ] (show)

      As I said governments have the ability to raise taxes, I’d add they can sell public assets. They are unlikely to hold convertable assets that 100% back a currency, but it simply isn’t true to say that governments don’t back up their currencies. crypto currencies by contrast include currencies with nothing to back them up at all.

      1. [ This comment is from a user you have muted ] (show)

        Do you know the concept of “big lie”? It’s mentioned briefly in Hitler’s Mein Kampf. Basically, most people are good, and for that reason, they can understand small “white lies” but not outrageous acts of evil, as they are not capable of that themselves. I think the whole issue with fiat money is the same.

        Let me try again. Our little example economy has a bank account containing 100 gold coins and 100 physical goods to be exchanged with it (1:1 parity). Since people is lazy and don’t like to carry physical gold, they pay for the goods with a cheque, and they issue it to the bearer to avoid complications. it happens that the seller is also lazy and don’t want to go to the bank to cash the cheque, so it passes it to someone else. Over time, only the cheques circulate and nobody goes to the bank to cash them. Thing is, the cheques originally represented 200 units of tangible wealth, and not 100: 100 gold coins and 100 goods. When governments removed the gold parity, the whole economy shrank 100 units of tangible wealth. People didn’t notice it because they had forgotten that they were owners of both tangible goods: the regular ones AND the gold. Not individually of course, but as a group (the bank is never the owner of the deposited wealth, only a custodian).

        The paper bills we all know are no longer cheques because they don’t point to funds stored in a bank account. The bank account just disappeared. They are just pieces of paper that give you no ownership rights over anything. Should the government decide to sell the public goods you mentioned, it’s not obligated in any way to give you some of it. You’re not the owner of the public goods. You don’t own anything.

        Like I said, the government ensures demand for your worthless pieces of paper by monopolizing the economy (in a specialized society money is needed just to exchange goods). The only thing that sustains its demand is that people didn’t have any option but to accept them. But If emerging currencies like Bitcoin put an end to the monopoly, there is nothing preventing a regular currency from free falling. I don’t think the government is worried about you losing everything; they are worried that you (and millions others united by this and not divided by religion, race, etc.) will begin to question what did they do with your gold. Who’s got to keep 50% of all wealth; and how.

  12. [ This comment is from a user you have muted ] (show)

    Hi Miguel, thank you very much for your essay. I wondered if you could go back into it and try and remove all instances of first person commentary? I’ll then give it an edit and return it to you for approval? Thanks.

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