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Publish at September 20 2022 Updated September 20 2022

How to stabilize the price of currencies and crypto-currencies

Economic crisis and currency volatility

The economic crisis is global and everything is falling apart all over the world because we are all interconnected. And, the problem is human and urban survival. Today, prices are exploding for everything and it is a more than sensitive situation when we talk about food and energy.

STABLISHING THE CURRENCY AND CRYPTOMONIES seems to be the goal to achieve to stop the explosion of prices and especially the price of energy, but isn't the solution rather to go back to the origin of the currency and reformat a stable economy of survival?

What is a cryptocurrency?

"A cryptocurrency, also known as cryptoasset, cryptocurrency, cryptocurrency or cybercurrency, is a digital currency (digital asset) issued peer-to-peer, without the need for a central bank, usable through a decentralized computer network. It uses cryptographic technologies and involves the user in the transaction issuance and settlement processes."

As of June 16, 2022, according to CoinMarketCap, there are 19,893 cryptoassets, or cryptocurrencies, worth €941.7 billion...

...Stable cryptocurrencies (stablecoins)

Stable cryptocurrencies (stablecoins) aim to replicate the value of an asset, the dollar, gold or the euro. The goal is to not be subject to market volatility.

Notable stablecoins include:

  • USDT (Tether)
  • DAI
  • USDC (Coinbase)

Stablecoins are considered by central banks to have the potential to not only affect financial stability, but also to undermine monetary sovereignty. The Financial Stability Forum proposes to regulate and supervise stablecoin, at least those that, due to their global and universal nature, pose a problem in terms of financial risks. This recommendation follows the G7's 2019 position.

The Basel Committee's rules require banks to assign "risk weights" to the different types of assets they hold to determine capital requirements. Stablecoins would fall under the existing rules and be treated the same as bonds, loans, deposits, stocks or commodities."

Source: Wikipedia Cryptocurrencies: https://fr.wikipedia.org/wiki/Cryptomonnaie


In the current context of economic crisis, crypto-currencies are being promoted especially those said and thought to be stable. But, unfortunately, they are negatively influenced by the global situation. Why? Because when the new Blockchain technology arrived, it was so innovative that the innovators who developed the first crypto-currencies like Bitcoin did not have the scientific maturity to create a new economic system. They clung to what they knew and therefore duplicated the original concept of traditional currencies and developed that concept on the framework of this new technology.

For example, the concept of complete transparency of the accounting ledger that is the Blockchain has been completely bypassed in order to protect the anonymity of the crypto-currency holders. The arrival of these crypto-currencies was a necessary first step that re-formatted our view of the monetary world. For example, with the limitless issuance of money boards during the COVID crisis to maintain economies associated with the arrival of these digital currencies relying on communities alone, everyone rediscovered that a currency is actually based on trust and nothing else. 

The traditional currencies are doing badly? Then all the crypto-currencies indexed to traditional currencies are doing badly too. What's more, those currencies that are doing badly, are not ready to be replaced by a crypto-currency like Bitcoin. They are resisting. As a result, instead of finding solutions jointly, they are waging war against each other.

What to do? Perhaps we need to look to history. This is not the first time this situation has happened. It's the first time it's happened globally, but not the first time alternative solutions have been put in place. Let's take a look at what Wikipedia tells us about currencies.

What is a currency?

"Money is defined by Aristotle by three functions: unit of account, store of value, and intermediary of exchange. In the contemporary period, this ancient definition persists but needs to be amended, among other things by the removal of any reference to precious materials (from the fourth century in China) with the gradual dematerialization of monetary media, and the legal aspects of the use of money - in particular the legal rights that are attached to legal tender and the power of release - which are more apparent. These rights are fixed by the state and make money a constitutional institution and the reference to a market territory in the form of a national market (linked by a monetary unit, of common account)."

Money is the instrument of payment in force in a given place and time:

  • from the fact of the law: we speak of legal tender;
  • from the fact of uses: economic agents accept it in settlement of a purchase, a service or a debt.

Money is supposed to fulfill three main functions:

  • intermediary in exchanges: the ability to extinguish debts and obligations, especially tax obligations, constitutes the "liberating power" of money;
  • reserve value;
  • unit of account for economic calculation or accounting.

A currency is characterized by the confidence its users have in the persistence of its value and its ability to serve as a medium of exchange. It therefore has social, political, psychological, legal and economic dimensions. In times of unrest, of loss of confidence, a currency of necessity may appear.

Money has taken the most diverse forms throughout history: beef, salt, mother-of-pearl, amber, metal, paper, shells, etc. After a very long period when gold and silver (as well as various metals) were the preferred media, money is now mainly dematerialized: cash, or fiduciary money, now constitutes only a small part of the money supply.

Each currency is defined, under the name of currency, for a monetary zone. There it takes the form mainly of credits that make deposits and secondarily of bank bills and coins. The currencies are exchanged between them within the framework of the international monetary system.

Because of the importance of the currency, the states seek very early to ensure the maximum monetary power. They define the official currency in use in their territory and ensure that this currency is the symbol and mark of their power. They gradually arrogate to themselves the monopoly of issuing bills and coins and exercise control over the monetary creation of banks via legislation and the monetary policy of central banks."

Source: Wikipedia - CURRENCY: https://fr.wikipedia.org/wiki/Monnaie


In the beginning, money served as a value of exchange. First barter, then shells that dematerialized barter, then money indexed to often the value of gold. It has simplified the life of its users, but it has become more complex, it has been detached from its real value to become today a concept of credits. Today, the whole economy is based on a consensus that we depend on international monetary agreements. Overnight we can all become poor if, for example, all debts were cancelled or uncollectible or if the main assets were drowned or disappeared. The machine has gone haywire. What to do? 

...

While writing this article, I came across the definition of necessity money. I'm glad, because it ties in with a project I wrote 4 years ago called REED that was dreamed up for an Xprize. REED aims to lift people who earn less than $2 a day in rural Africa out of poverty. At the heart of this program, a currency: the SOLAR TOKEN in reference to the Sun, the energy of life. My inspiration was that of free trade systems. But what does it matter the visions come together. 

Money is mostly an energy that allows the economic engine to move forward. Too much energy the engine chokes and creates social, urban, global bias, not enough energy the engine stops and it is famine and economic misery. This currency was thought to stabilize the financial situation of the poorest and put them in an economic bubble, out of the speculative system.

And, I later used the SOLAR TOKEN for a competition with Open Geneva for a project called SMILEY imagined in part to distribute digital tokens to the poorest families and elderly in Geneva to cope with the COVID crisis that had increased the cost of food by 17% in one year. It is the return of the principle of the shell that was given in exchange for seeds and basic necessities. Today, it is digitized in the form of vouchers.

National food price inflation

Measured as the year-to-year change in the food component of a country's consumption), the consumer price index (CPI)) remains high. Information from the most recent month between May and August 2022 for which food price inflation data are available shows high inflation in almost all low- and middle-income countries; 93.3 percent of low-income countries, 90.9 percent of lower-middle-income countries, and 93 percent of upper-middle-income countries experienced inflation levels above 5 percent, and many countries are experiencing double-digit inflation.

The share of high-income countries experiencing high inflation has also increased sharply, with about 85 percent experiencing high food price inflation. The most affected countries are in Africa, North America, Latin America, South Asia, Europe, and Central Asia (Figure 2). In real terms, food price inflation exceeded headline inflation (measured as the year-over-year change in the headline CPI) in 78.8 percent of the 156 countries for which both food and headline CPI indices are available (Figure 3)."

Source: World Bank - FOOD SECURITY UPDATE: September 15, 2022: https://thedocs.worldbank.org/en/doc/40ebbf38f5a6b68bfc11e5273e1405d4-0090012022/related/Food-Security-Update-LXIX-September-15-2022.pdf

In the same report, Zimbabwe's food cost inflation is 353%, Lebanon's is 240%, Zimbabwe's is 68%, Venezuela's is 131%... each number is a disaster foretold. And, the world community lets it happen and reacts little when all this is really only consensual. It is maintaining a global balance that has already broken down. While everything is there, for centuries at hand.

Let's go back to the history of currencies:  necessity money

"Necessity money is a means of payment issued by a public or private body and which, temporarily, supplements the official money (coins and bills) issued by the State when the latter becomes scarce. This type of fiduciary money is generally used during economically troubled periods: war, revolution, financial crisis, etc, or of geopolitical transition (colonization, annexation, independence, etc.).

The term "currency famine" is also used to describe periods of unrest during which divisional currency runs out.

It is also a generic expression to qualify payment tools taking various forms and using various materials: voucher, token, cardboard, postage stamp, porcelain, glass, etc. ...

Many necessity coins have thus been found in the form of coins cut generally in two, more rarely in four. As an illustration, the Dupondius of Nimes was cut into 2 or 4 in the Roman Empire, particularly in provinces that lacked divisional coinage such as Germania and Gaul (3)...

...The first examples of modern necessity money

appear at the end of the seventeenth century and tend to merge with the official protomoney of a country where economic and political conditions are not yet stabilized: the supply of the monetary institute is then supplemented by various private initiatives.

As early as 1685, under Louis XIV, in New France, card money was created, which consisted of declaring playing cards to be legal tender in order to compensate for the lack of metallic cash. Later, in 1837, the British Empire authorized four banks in Lower Canada to issue "inhabitant tokens."

In Sweden, between 1715 and 1719, 42 million 1-daler coins were minted by the government not in silver but in copper. Referred to as nödmynt ("emergency money") and guaranteed by the authorities, they allowed the Swedish state to keep silver metal in its coffers during the Great Northern War.

In France, during the Revolution, in parallel with the issuance of assignats, which were forced currency, flourished necessity currencies such as monnerons and "bons de confiance".

The production of necessity currencies would explode during the First World War in Europe and in the colonial territories. The main reason is that the stocks of copper and nickel used to manufacture divisional currencies, now go to the armament factories, hence the appearance of paper vouchers or coins in poor non-strategic metals (iron, aluminum) at forced price. After this global conflict, states will take some time to reorganize their finances and monetary policies, so necessity currencies persist, while hyperinflation is rampant (5).

In Argentina, provincial and private currencies were issued during the Economic Crisis of 1998-2002."

Source: WIKIPEDIA - NECESSITY CURRENCY: https://fr.wikipedia.org/wiki/Monnaie_de_n%C3%A9cessit%C3%A9


The machine has run amok how to proceed with necessity currency(ies)?

Necessity currency is not going to replace other currencies. At least, not at first. A necessity currency must take place in a positive ecosystem with respect to the problems to be solved. Here, there are 2 main problems, food and the cost of energy.

Let's take the example of food. Users of this currency need the cost of food to be or at least remain affordable for their wallets. These users live in a defined territory, a city, a region, a country. This region is either self-sufficient and suffers from external inflation, or it obtains its food from outside at prices it cannot control.

Let's take the simplest case of self-sufficiency. If this region is self-sufficient, the first thing it can do is determine that within its territory the prices of locally produced foodstuffs are blocked. This is a political decision in agreement with the peasant corporations and other concerned interlocutors. 

This is a collective work that requires a benevolent vision of the world and hope in the future.Implementing this kind of project requires monitoring the beneficiaries as to their needs on a month to month basis in order to refine and adjust the balance between orders and production.

On the other hand, we must be aware, that the distribution chain will be very short. It may even be the death knell for distributors. 

To be sure that no speculation, corruption, misappropriation can be set up, traceability (physical, digital via Blockchain or/and AI) is essential. Because, on the one hand, it is necessary to be sure that each beneficiary will be served and  on the other hand put in place a system of identification by person and by family in order to have fair aid actions.

There may be several systems needed, but in this case the data flows must be designed to be controlled according to the principle of interoperability (connections by different control services). Because, on the one hand, a new currency or a new ecosystem of currencies is set up, with risks including that of money laundering for example. 

This type of currency can take several forms. The first, that of a cryptocurrency whose use is reserved for specific purchases such as food. We buy this cryptocurrency with maximums per individual and per family that alone can allow us to buy certain products, here food products. It is a protected food economy.

A second kind of new currency can also be the issuance of food vouchers. In this case, it is the City, the Region, the Country that buys them thanks to taxes for example or aid funds and distributes them to those entitled in paper or digital form. This has been done in several cities around the world.  The problem in the paper form is the control of the nature of the purchases.

Let's remember CARITAS in Geneva during the first summer of COVID, which distributed vouchers that were spent in part on alcohol and cigarettes. To limit this problem, the entire sales chain must do things seriously or risk being excluded from sales or having to deal with products being returned to the shelves at the checkout. 

Another solution is to break the current value chain for necessities and create a whole new economy around these products based, for example, on the value of human life. For example, a human is such and such a quantity of water, such and such a quantity of food, such and such a quantity of energy and all these quantities are no longer purchasable or exchangeable on the standard economic market. 

Every problem has a solution or solutions. Some are radical, others more in half-tone. It's going to take the various jurisdictions choosing with the citizens for the citizens. And, if we want to stop the major shortages that are facing us, we must act now. The costs of increasing energy by 2 or 4 are announced. Not every family can afford it.


Some say our problems are complex, intractable. Perhaps because they have been taught to be super-gifted experts in their field but unable to get out of it.

Complexity is understanding ecosystems, systemics, the effects of 360-degree decisions of a reality. This is where schools have a role to play by training champions of complexivity who will be able to anticipate these crises and get out of the usual non-effective remedies that reassure the crowds.

IMAGE source: Pixabay MABELAMBER


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