The troubled life of fiat money: from ostrakas to cryptocurrencies

Description

This work examines the long-term history of money, focusing in particular on fiat forms, whose demand and possession is based on the trust of their capacity to perform the typical function of unit of account, means of exchange, and store of value. Its evolution was based on conventional or legal acceptance of rare goods, mainly gold an silver, other common metals, tablets (ostraka), paper currency. The 2008 crisis paved the way for Bitcoin, a “virtual money” with a decentralised ledger, followed by numerous cryptocurrencies, five of which were designated as official dollar reserves by the Trump administration, creating the possibility that the foreign exchange rate regime could evolve into a dollar-crypto standard, which, in turn, is plagued by the impact of the powerful AI on its account security. This situation highlights the need for a new global agreement; however, given the current state of geopolitical developments, such an outcome seems highly unlikely and, in any case, no global leader has it on their agenda as yet. The resulting alternative could be the outbreak of a new monetary and financial crisis with disastrous economic and social consequences.