Economic problems have long plagued people why bitcoin can solve?

Economic problems have long plagued people why bitcoin can solve?

[Abstract] as the Triffin Dilemma is that countries want to protect national savings level, but also take into account the international liquidity problem, this is inevitable contradiction. However, the emergence of bitcoin can bring change?


As the only international reserve currency, the US Federal Reserve Notes (US $) has brought many benefits for business development, however, itself still exist many problems.

One of the most prominent is the famous “Triffin Dilemma” (TriffinDilemma) – the national conflict in the short term and long term international to solve domestic problems, appeared this dilemma.

If a country’s currency to meet the international needs, so a long time, it will lead to the deficit.

The dollar is the victims of “Triffin Dilemma”. However, bitcoin as a “stateless” currency, will make up for this defect, provide more powerful support for globalization and economic system.

“Triffin dilemma”

The economic and financial research people know that “Triffin paradox”, is also the Triffin dilemma. American economist Robert Triffin? There is an inherent contradiction itself cannot be overcome in its “gold and dollar crisis — the convertibility of the future” a Book of the Bretton Woods system: the United States for global economic growth because of the dollar with gold, other currencies are pegged to the dollar, although it made $the core of international currency, but countries for the development of international trade, must as a settlement and the reserve currency in dollars, which will lead to the outflow of money in the United States continue to precipitate in the overseas, the United States will have long-term trade deficit; and the premise of the dollar as the international currency is the core must keep the dollar stable and strong, and this requires the United States must be a long-term trade surplus in china. These two requirements are contradictory, it is a paradox. It is this “problem” determines the necessity of the Bretton Woods system instability and collapse.

In 2009 March, during the economic crisis, has always been to reform for the people’s Bank of China governor Zhou Xiaochuan, who wrote “thinking” about the reform of the international monetary system. In this paper, he clearly put forward by the International Monetary Fund’s special drawing rights instead of the dollar, as a super sovereign reserve currency “world yuan”. Moreover, he believes that such a super sovereign reserve currency not only eliminates the inherent risk of sovereign credit currency, but also makes it possible to manage global liquidity. Managed by a global institution of international reserve currency will create and control the global liquidity as possible, when a country’s currency is no longer used as the yardstick for Global trade and as the benchmark, the country’s exchange rate policy adjusting effect on imbalances will be greatly enhanced. This will significantly reduce the risks of a future crisis and enhance crisis management capability.

However, the proposal of Zhou Xiaochuan did not get a good response, because, in the view of economists, the International Monetary Fund’s special drawing rights instead of dollars this move is not to see the future. So far, it has not been able to find a good solution.

John Nash’s response?

In order to solve the Triffin Dilemma, the famous mathematician, the late John Nash also made great efforts?. It seems that he provides a theoretical support for bitcoin invention, he is also an advocate of monetary reform.

Nash think, is to establish a long-term stability of the international reserve mechanism. In such a mechanism, each country can operate independently, but also can compensate for the lack of credit based currency.

Cryptography and virtual currency seems to be able to meet the demand, therefore, according to the John? Nash theory, bitcoin was born.

Bitcoin can really solve the Triffin Dilemma?

As the Triffin Dilemma is that countries want to protect national savings level, but also take into account the international liquidity problem, this is inevitable contradiction. However, the emergence of bitcoin can bring change?

If in the following terms, bitcoin may really be a good solution.

1. stable value

Eli in the analysis of price fluctuation a contrast to recent bitcoin, Dorado? That bitcoin and stability to nearly 15 years of the euro is similar. The Federal Reserve also found that approximately every 8 months, bitcoin will double the number of users.

2. based on the rules of the currency

In the bitcoin economy, this is perhaps the most interesting point. This is a model of monetary policy.

In twentieth Century, the central bank and the people’s decision is the catalyst of monetary policy, and now the role of currency issued by the encryption limit replaced by the rules. The basis of computer based currency could make monetary policy more solid, because it can adapt to external changes.

3. controllable supply plan

Compared with the traditional currency, bitcoin supply plan is relatively less elastic. Therefore, whenever (past or future), supply we can accurately get bitcoin, and timely to make necessary adjustments to the domestic policy.

In fact, as people gradually understand the encrypted currency, bitcoin has more and more users believe that troubled economic circles Triffin problem will soon be solved.

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