The story is full of new coins that have failed. What makes crypto different?

History shows us that we should be suspicious of the idea that monetary systems always change for the better, and suggests that the rapid growth of a currency in a fractured society can precipitate its self-destruction.

Confusion and agitation around cryptocurrencies sometimes recall the German drama Faustfrom the nineteenth century.

In Goethe’s masterpiece, the devil Mephistopheles offers to an emperor the tempting view of a boundless wealth through the printing of paper-moeda.

The emperor grabs the idea, unprecedented at the time the piece is located, and the magic wealth that the role creates brings a brief prosperity to your troubled domain.

But what seemed an inexhaustible source of value quickly proves to be illusory. A combination of misunderstandings and excessive enthusiasm leads to economic and moral corruption, and the Empire dives into chaos.

It is a story that can very well have parallels with digital currencies today, says Hiroki ShinProfessor of History at the University of Birmingham, in an article no. Many people use them without fully understanding how they work, sometimes with financial losses.

And history shows us that We must be suspicious of the idea that monetary systems always change for the betterfollowing a kind of natural evolutionary path. In fact, new monetary systems do not always avenge, and even when they triumph, the change of monetary regime can be long and painful.

For over 2,000 years, coins and chips were usedwhich remained until the nineteenth century, when The role eventually dominated. Instead of a clear and irreversible transition from currencies to notes, the countries frequently alternate between the two systems.

There was Experiences failed with paper-moeda In the fourteenth century China, in the seventeenth century Sweden and in the eighteenth century, to name only a few examples. Investigation on these problematic attempts suggests that social division makes particularly vulnerable monetary changes.

During the War of American Independence, for example, a coin emerged in 1775, the “Continental dollar”which was quickly abandoned due to mismanagement and misunderstanding. But he also contributed to accentuating the political tensions among the patriots who supported her and the lealists to the British Crown, who hated her.

Similarly, in the 1750s and 1760s, the Sweden government issued paper-moeda not rescuable to pay your debts of war. Mass extreme inflation that followed He coincided with strong social divisions and led to a period of political chaos.

Em 1789, At the beginning of the French Revolutiona public debt title was issued on paper that quickly lost value. Seven years later, “assignedIt was practically useless.

Britain was done slightly better. The suspension of the metallic pattern in 1797, under the financial pressure of the Anglo-Francesa war, did not cause the collapse of the currency on paper.

But the system based on paper ended in 1819in a year of intense class conflicts that culminated in the Peterloo massacrewhere at least 18 people were killed and hundreds were injured by the cavalry during a peaceful demonstration for democratic reforms.

The public had started to hate the notes from the Bank of England, which became a symbol of economic depression and political oppression. Britain then followed the standard of other countries, returning to a traditional monetary system based on the solid value of precious metals.

Estes paper-moeda failure cases – And there are many more – show that the widespread acceptance of a coin ultimately requires shared values ​​and social solidarity. The paper-moeda works when there is confidencewhen people know it has already been accepted in the past and will continue to be accepted in the future.

Otherwise it would be unlikely that A simple piece of paper become a reliable means of payment and reservation of value. Once these common values ​​are lost, a Monetary devaluation descendant cycle.

The success of cryptocurrency

In the 21st century, the cryptocurrencies challenge the conventional idea money as something endowed with value – or at least associated with something of valuelike gold. And as something issued and managed by a trusted central authority.

Cryptocurrency exist only in the field of Blockchain technology. Its value is created and maintained not by central banksbut by complex computer algorithms.

For many, all these abstract computational processes make cryptocurrencies as mysterious as the black magic of Mephistopheles In Faust.

Still, with the strong support of Donald Trumpcryptocurrencies live a moment of growing popularity. This trend will undoubtedly be reinforced by a greatest deregulationwhich will reduce transparency requirements and weaken consumer protection safeguards.

The rise of popularity coincides with the apparent preference of the US government as a way of boost US exportsmaking your products cheaper abroad.

These events can delay of the monetary system on the global scale. As the dollar loses value and the rules on crypto are softened, countries and investors around the world may feel attempted to diversify your assets and increase your reserves in cryptocurrency.

But the combination of social division and its rapid expansion can actually Not being a good omen for the future of cryptocurrencies.

Far from imposing themselves as a dominant means of exchange in a new decentralized regime, history suggests that their rapid growth in a fractured society may, on the contrary, on the contrary, precipitate your self -destruction.