We Can’t Count on Fiat Forever – Here’s How Crypto Can Help
As I write this, one dollar is worth .89 Euros, 110.8 Japanese Yen, and .77 British Pounds, but the exchange rates are likely to be different tomorrow, or even in the next five minutes. Such is the uncertainty we must accept when it comes to the value of fiat currencies.
The only means available to us for measuring the value of money is by comparison to other currencies, hence why the value of the Euro, Japanese Yen, and British Pound are compared to the US dollar as opposed to a Somali Shilling (at the time of this writing worth $.0017).
The bigger question is, why are we stuck in this comparison game and do not have a standardized monetary measurement unit when we have standardized units of measure for distance, volume, and temperature?
What is a Universal Financial Standard and Why Do We Need One?
The closest thing we have to a financial standard is the Special Drawing Right (SDR), which was created by the International Monetary Fund (IMF) in 1969 and is based on a basket of five of the world’s most stable currencies | Source: Shutterstock
A global financial standard would be something akin to meters, liters, or celsius—a trusted and standardized unit of account that can be applied to value.
The closest thing we have to a financial standard is the Special Drawing Right (SDR), which was created by the International Monetary Fund (IMF) in 1969 and is based on a basket of five of the world’s most stable currencies: U.S. Dollar, Euro, Japanese Yen, British Pound, and the Chinese Renminbi.
However, you don’t see Bloomberg comparing the Jordanian Dinar or Paraguayan Guarani to the SDR. This is because the SDR is exclusive to the IMF and its nation members, as opposed to universal, and, therefore, cannot be used as a currency by individuals or businesses.
