There will be only ONE.
At present, all logic is pointing to bitcoin.
Let’s start with exchanging one good or service for another is a process known as barter exchange.
Barter can work at small scales.
Here’s an example with 6 unique items.
This economy of 6 items requires keeping track of 15 different exchange rates.
But an economy with just 500 unique items will have 124,750 exchange rates, making the barter system infeasible for a complex economy of millions of items.
This problem (known as a coincidence of wants) is solved by using a single common medium between all transactions.
Usually, the most tradable good in a society is termed ‘money’.
Previously, this was decided by the free-market, based on
a good’s monetary properties.
Today, it’s a top-down phenomena, imposed on citizens by sovereign governments.
Money may differ in different places if there are significant enough barriers between them.
In the case of sovereign nations, a few things help create barriers and ensure a monetary monopoly: physical borders, capital controls, legal tender laws.
But we now have a global digital communications network (the internet).
This is breaking down borders and creating a single market, enabling international commerce at the level of the individual.
We now come across a similar version of our barter problem, but this time with the currencies themselves.
And once again we'll converge, this time on a single global monetary medium.
The chosen medium to bridge this gap will need to be:
1. Neutral (no single group has seigniorage)
2. Global (accessible everywhere)
3. Transparent (anyone can verify & audit)
4. Indestructible (cannot be shut down)
5. Peer-to-peer (enable commerce at the individual level)
By assessing the relative properties of all monetary goods, a winner emerges and the market converges.
Right now, all evidence points to that being bitcoin.
But it doesn’t end at simply intermediating currency exchanges.
Ultimately, we end up with a global economy, bypassing jurisdictionally-restricted money, transacting through one common digital monetary medium.
Thanks for reading.
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