The currency can cause problems for businesses,The currency can cause problems for businesses,

The creation of the stock market was a way to expand capitalism and create abundance for those who participated in it. The cryptocurrency market and its underlying technology represents a new form of expanding wealth beyond the borders of a single country or economic system. The cryptocurrency market cap in January 2018 has crossed USD 500 billion. We think this indicates a phase where we will see more efforts to create a symbiotic coexistence of fiat and crypto currencies.The function of moneyMoney provides 3 primary functions in an economy:A metric of cost: It allows a person to provide goods and services, receive money to recover the opportunity cost for providing that service, and use the money to buy food, shelter, and clothing.Value preservation: The person above provides his/her services to multiple customers and earns a lot of money. But if there is no immediate need for food, shelter, clothing, the money can be stored for use later.Information store: Money takes the form of different currencies in different economies. Prices in one currency for a good or service is money, but not one that can be used in a different economic system. The money in that case provides a common basis for information storage and exchange.Macroeconomics of cryptocurrenciesWhen a central bank creates new fiat money out of thin air (the M0 supply), it also needs to predict how much new businesses and goods the new money will create over a future time period. This is because a volatile currency can cause problems for businesses, requiring them to change wages, prices, and financial forecasts. So a currency needs to be fairly stable in terms of exchange rate, and the prediction of the demand for the currency helps to achieve that. The demand and influx of the new money then stimulates new products and services that are exchanged. Brand new products and services that generate demand with no previous pricing history will require more M0 to be produced and distributed through the system so people can buy them. Studies have shown that expanding economies see constant growth in demand for money.With the arrival of cryptocurrencies, we are experiencing shifts in how money is created and distributed in an economy. Companies can create their own currencies as a unit of wealth that is not managed by a central authority. They cannot be used to predict demand, but they perform the functions of money. Assume a company provides a transformative service in cross-border asset transfer between individuals. Users of the network use the service to transfer assets using an internal currency (token). The receiver gets a certain amount of tokens as part of the transfer, and later can send some of that to another user as part of a different transaction. As new users join to use the service (because it is valuable), it will increase the demand for its tokens and drive up its value. A user would have to have a token balance, borrow tokens, or buy tokens in order to use the service. In fiat currencies this demand generated would have to be satisfied by a central authority by creating more M0. In cryptocurrencies, however, the M0 equivalent to drive the economy is issued by the company whose services are being used. This is conceptually similar to loyalty points for a business, which act as money in the context of the company. The difference is that loyalty points are created as a small fraction of fiat purchases and the percentage of business from them are infinitesimally small to affect the information function of money in the economic system of the enterprise. In case of cryptocurrencies, the wealth of this network for a company can be developed with a minimal initial use of fiat money, and can then grow independently driven by the increase in value of its token. The token interacts with fiat only when a user when a user wants to withdraw funds or add more funds to their account. Even in that case, there is a growing use case of users exchanging a crypto token for another crypto token that they think is even more valuable.Cryptocurrencies are creating a wealth of commonsCryptocurrencies are a new unit of wealth that is moving parts of the economy from a “tragedy of commons” paradigm to a “wealth of commons” system. This system leverages networks instead of vertically integrated top down owned companies. Instead of a centrally organized equity capital structure, people voluntarily contribute to a project. If others in the community consider the project to be of value and think it has a solid business case, the early risk takers get rewarded. The rise in value of the project’s token thus creates a new form of wealth for the enterprise.We are slowly seeing an emergence of enterprises where fiat currencies make a small portion of the turnover. From the point of view of the traditional economy, there are two ways to see this: a) there is no economic growth because the cryptocurrency is not controlled centrally, or b) recognize that there are new opportunities emerging in the economy which are paid for in uncontrolled, unregulated, and non-guaranteed cryptocurrencies. Doing the latter and bringing it into the overall fold of the economy will create a harmonious coexistence of the fiat and crypto currencies.