In 1933, after the Great Depression, the United States effectively abandoned the gold standard which paved the way for the world's largest fiat currency, the US Dollar. This changed currency as we knew it.

Overnight, money began to be created by fiat - by instruction - through the Federal Reserve and its value was determined not only by demand and supply but affected by interest rates set by government appointees.

For the average saver, the gold standard worked exceptionally well, as supply of gold was limited and the value predictable, meaning inflation was low if at all existent. As an economic phenomenon, the gold standard bears many similarities with cryptocurrencies emerging today.

Like Bitcoin, gold is limited in supply and can not be, at a whim, created by third party intermediaries. The benefits of cryptocurrencies over gold however are simple but overwhelming. Gold can be found only in some geographic areas and is difficult and even dangerous to transport, making storage by a third party essential.

Any debate about the reintroduction of the gold standard would have to involve a debate around a national cryptocurrency based on the concept of Bitcoin. This idea is less far fetched than at first one would presume, as China and Russia are examining this possibility already. What shape and form China and Russia's new cryptocurrency might take is yet unknown and may very well run parallel to the existing currency rather than replace it.

National currencies in any shape or form would have to have at least two defining characteristics. Firstly, taxation would be collected in the national currency, ensuring demand for that currency, and secondly it would be considered legal tender, therefore enjoying acceptance at all vendors.

Many within the digital currency industry argue that what Russia and China are studying may be contrary to the principles that led to cryptocurrency to begin with. Entrepreneurs all over the world are helping to design a decentralised economy by building blockchain projects underpinned by their own tokens. They dream of a world independent of third parties, intermediaries and centralised authorities, including the pursuits of central banks and corrupt governments. These companies have been exceptionally successful at gaining financial support from token buyers worldwide.

Well over $1.2bn has been raised so far this year in Initial Coin Offerings (ICOs), the common name for token sales. Tokens are extremely liquid and tradeable assets that exist on a blockchain; their market value is typically derived from supply and demand alone. This new system allows for a highly diverse landscape and a new frontier for organisational structure and development. This system rewards risk and value creation independent of a company or person's location, geography, gender or race.

These assets vary in aim and purpose. A variety of tokens currently exist and a national cryptocurrency would add nothing to this emerging sector but would merely upgrade the current fiat structure, by also removing the anonymity that cash brings to the table.

The beauty of tokens and cryptocurrencies is that third party intermediaries are not involved at all, and that cryptoassets are global from the moment they are born. A national cryptocurrency misses the point, by being limited to a piece of land, and even being centrally controlled by a government - with all the issues derived from it, such as crazy inflation as we have seen in many countries during the last decades.

A national cryptocurrency may very well be a good alternative to the current financial infrastructure but is totally contrary to the movement that we have seen emerge over the past years, where nations are slowly being outdated in favour of a global, free, disintermediated world.


Luis Cuende is the co-founder and Project Lead of Aragon; he previously cofounded blockchain startup Stampery, and created the world's first Linux distribution with facelogin.