Originally Posted by jammies
This question is more subtle than it appears on the surface - banks create money by means of the deposit multiplier when lending funds out. This works because it is just numbers being manipulated, and you can have (for example) a billion dollars lent out with only 10% of that actually on deposit. That money circulates back between lenders and borrowers and provides a natural increase to the money supply based on economic activity - how much "work" that money does - and how much the multiplier is set to by the government.
Crypto, though, cannot be manipulated in this way, I can't lend you 10 bitcoin or ethereum or whatever if I only have 1 myself. It's not just numbers, they are tokens or "coins" which is touted as an advantage, but it really isn't. It is, as I've mentioned before, much like the days when gold and silver functioned as money.
The invention of fiat currency and the rise of modern banking underpins the economic structure of the world, and you can't successfully replace that interlocked system with crypto without the means to grow the money supply other than through so-called mining, which is, again, much akin to needing to mine more physical gold or silver back in the pre-fiat world. Giving governments control and regulation of a fiat money supply is what allowed commerce and business to grow and thrive far past what was ever possible before. Decentralized currency would do the opposite and kill economies as the money supply would stagnate or contract, not grow.
Even if you think fiat is fundamentally flawed, going to a model with flaws that are not debatable, but a matter of historical record and fact, is foolish. It is not a question of what crypto can do, it's extrapolating what the effects will be of losing the ability to do what it is deliberately designed not to do - allow organic inflation of the money supply .
Likely someone will claim again "you just don't understand the technology" but that's not an argument, that's just a dismissal and statement of belief. Crypto boosters think understanding the technology equates to understanding the ramifications of that technology, and they are wrong. Digital currency is the future, not cryptocurrency, as it's an evolution of what already works, not a revolution driven by technical elegance over practicality.
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