Predictions on Cryptocurrencics and Its Future Effects
To help put the future into perspective, let's first look to the past for an example.
Two hundred years ago in the 1800's over 90% of the U.S workforce was in agriculture
(Craig, L. A., & Weiss, T. 1998). Today however, less than 2% of workers are in
agriculture according to The World Bank (2010). How did an exodus of 88% of the labor
force leaving the agriculture industry not cause horrific food shortages over time? How
did the economy survive and citizens' standards of living not plummet due to such a
decreasing amount of farmers? It's due to the process of creative destruction. The tenn
creative destruction was made famous by economist Joseph Schumpeter in his famous
work title Capitalism, Socialism, and Democracy ( 1950). What it means is that
innovations in the market cause the old and ineffective to die out and the new, more
effective, and more efficient to replace them. In tenns of the fanning example, the use of
genetically modified crops that have exponentially larger crop yields than traditional
crops yields, the higher levels of capital investments into advance machinery fanners can
now purchase to more quickly harvest the larger crop yields, all lead to the destruction of
jobs for the super majority of the farm hands and field laborers (Dimitri, C., Effland, A.,
& Conklin, N. 2005) and (Council for Economic Education. 2015).
There is no need to start a revolt for the individuals whose jobs go existent due to
creative destmction. 88% of the workforce didn't die in a ditch or choose to endure
unemployment indefinitely. They learned new skills for new jobs or applied their labor to
different sectors of the economy (Grennes, T. 2003). Some may have become business
owners and entrepreneurs adding new products and services to the economy and new
jobs. In the end, everyone wins because the economy is growing and becoming more
efficient. Food is now more affordable and plentiful, workers are learning new skills and
developing new products and services, the economy grows and standard of living
increases. All thanks to creative destruction.
Now look to the future.
Bitcoin is the harbinger of the creative destruction of
central banking, high transaction and exchange fees, and currency exchanges around the
world. Imagine the family or business traveler, not needing to account for the 3%-5%
fees of using credit or debit cards overseas, of not needing to carefully count how much
of a foreign currency they have on hand before they need to go to an exchange and buy
more of the foreign currency at the cost of a flat rate fee and percentage fee, or if they
travel to multiple countries that use different types of currency each and not needing to
re-do the exchange process every time they cross a boarder. The potential for bitcoin is
unprecedented and with the blockchain involved, that potential is nearly unlimited. But
first let's focus on how bitcoin will be the creative destmction of central banks.
