This episode of picks up from the last one where we began a discussion about money and Web 3.0. Alternatives to traditional money have been increasing in popularity, and if business owners want to stand out from their competitors, it’s important to know why and how they work.
Gold was the top choice to use as money until people started realizing the pitfalls of using it: it’s heavy and it’s unsafe to carry it around. This led goldsmiths to offer a safe place to store gold as a business. Soon, people went from exchanging gold to exchanging the notes they had for their gold.
Soon, these goldsmiths started issuing out more notes than they had in stored gold. This was the beginning of fractional reserve banking. As our economy has become more sophisticated, it became clear we needed centralized places to store gold. These became central banks. Over time, the government became more involved in controlling these banks.
This led to governmental temptation to inflate the money supply. In today’s world, any central authority can print and inflate currency. Why does all this and the mechanics of money matter to a business owner? Because the money supply of the world has greatly increased, and we’re starting to see the effects.
So how can this situation be made better? This is a problem that entrepreneurs of today have been working to solve. In fact, there is an entire industry dedicated to forging a better way. The change is coming, so we need to get better versed in what this will look like today.
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