Advantages of Using Silver Crypto-Currency
Asset backed currency is where the value of money is based on precious metals such as gold and silver. Fiat currency system is the alternative to silver backed currency where money value is not backed by any physical asset. The good thing about silver backed currency is that the government does not play any role in the value of money used in a country. Thus silver backed currency ensures that money value is not affected by so many external factors. This is because the supply of silver is the primary factor that will determine the value of money under the silver backed current. The following are the merits of using asset-backed assets.
Silver backed currency helps in maintaining the optimal amount of money supply in the economy. One of the causes of inflation is excessive money supply. This, in turn, leads to loss of value in the currency used in a country. Whereas low money supply leads to deflation. Inflation and deflation are two of the major concerns affecting economic growth negatively. By using silver crypto-currency a country is able to mitigate against these risks. This is because silver is limited in supply thus the only way to increase money supply is to increase silver mining activities. Thus this helps in the stabilization of the economy. Use of fiat currency system have seen some countries experience economic difficulties. This is where the government falls to manage the value of the country’s currency thus creating negative impacts on the economic. This creates a need to solve these negative economic conditions by using silver-crypto-currency.
Asset backed currency also helps in the prevention of economic bubbles. This is because the values of money is based on tangible assets such as silver that has fixed quantity of supply in the economy. The essence of avoiding economic bubbles is that many people end up losing their wealth and accumulating debts. This is because to a sudden increase in value of an asset that many people borrow money to acquire. The banks are able to give huge amounts of money as debt. People make huge loses when the asset they acquired suddenly drops in value. The use of asset-backed currency is ensured to preventing economic bubbles. This is because silver like other precious stones is limited in supply. Thus the value of money and assets acquired using more can only appreciate in value steadily. Silver backed asset helps to avoid rapid increase in value of assets that cause the economic bubbles and collapse.