Economics 101: Currencies are Simply Trade Instruments

in blurtech •  2 years ago 

Currencies, both fiat and crypto, don't actually contain any value they simply represent value. They are called Trade Instruments, meaning, instruments that facilitate trade. Stocks are an example of trade instruments that aren't money, they have no actual value but they represent a share of a company and the company itself does the work that turns the profits that gives a share its theoretical value. All trade Instruments work along the same lines: Fiat is traded by banks and Foreign Exchange companies, Stock is traded on Stock Exchanges such as the New York Stock Exchange and Cryptocurrencies are traded on various Cryptocurrency Exchanges. All of their values are representations of real things, for example Stocks Represent created and distributed goods and services by a particular company, while fiat currency represents created and distributed goods and services of a nation. Both change based on industrial/technological/scientific/developmemtal, etc advancements within those companies or nations, as well as various factors such as Trade Volume and Inflation, War, or Political Upheaval. For example, because ISIS Soldiers stole tons of Gold from the Bank of Mosul, Iraqi Dinar are now not worth as much, because they don't have the Gold to back their currency, and their country is in a Civil War. If in the next 5-10 years Iraq were to become a Peaceful place where people wanted to invest their money, Iraqi Dinar would go back up. It is best to trade your trade instruments at the highest value possible and use them to buy real items, such as: Precious metals, Livestock, Software, Machines, Produce/Seeds, Land, Realestate, etc and then use those to get more trade instruments.

Trade volume is how many people are buying and selling a particular currency or stock. The more people who are buying it, the higher the value will rise.

An example of Inflation is when the United States starts printing too much money. When this happens a dollar starts being worth less, which in turn means it will take more money to buy the same materials. For instance, if you go to the store and one day Milk is $3/Gallon but then you go a few months later and notice it is $5/Gallon, this is because of inflation. Inflation also drives things like the minimum wage and social security checks, which are usually based on the cost of living. Cryptocurrencies with no cap will eventually inflate into eternity and lose value, unless they have a high trade volume.

Supply and Demand is the comparison of how many people want something against how many there are of that thing. For example, when Apple creates a new IPhone the value is higher than it really should be and as the technology slightly or drastically ages, the value goes down.

A Whale is a person who has a large quantity of a certain trade instrument and uses that to effect the markets. For example, if someone has 51% of a particular stock they could either sell them all quickly which would bring the value of that stock down, or they could hold on to all of them which makes them more rare and makes them more valuable.

Bubbles are when something is artificially high in value, 2 examples of this are: IPhones as mentioned before, and Gasoline. Gasoline raises in value based simply on the speculation that "one day we might run out", this creates bubbles which raises prices. But Gasoline will probably be replaced by ethanol before it ever even gets close to being used up.

Look at different exchanges- Sometimes you can get more on one site than you can on another site, for the same coins. And sometimes you can even buy coins on one site and sell them on another site for more. This works better when you are trading Crypto to Crypto rather than Crypto to fiat.

Use coins to create goods and services- Don't just use coins to buy random things, buy software and other goods that you can use to produce things or spend them on things like textbooks. Create a product if you can.
Promote your favorite coins- If you have a favorite coin and buy some, don't forget to share it on social media.
Create a currency- Satoshi gave out the Bitcoin source code so that people could make their own currencies.
Create an exchange- Transaction fees can earn the owners a lot of coins and you can help fledgling altcoins by offering them on your exchange.

Don't buy above spot- If you are trading coins for precious metals, check the current global value of that metal and buy as close to that value as you can.
Invest in foreign countries- Don't think America is the be all end all.

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I originally posted this whole post on Steemit years ago

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  1. Canna-Curate + Minnow Support + Steemit Communities
  2. SBD ---> Blurt
  3. Blurt + Steemit + Canna-Curate on
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  6. STEEM Power to Steem-Engine, back and forth continuously selling Tokens and STEEM as needed for Liquid, or buying BLURT, etc.

We can also start trading Gold and Silver for Currencies, once a few people do that the value will basically be backed by Gold, and the person selling Gold for Blurt at $0.02 makes tons of earnings on the Blurt Moon Ramp.

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