Polina is an undergraduate student at Belarusian State Economic University (BSEU) where she is studying at the faculty of International Business Communication for a degree specializing in Intercultural Communication. In her spare time she enjoys drawing, music and travelling.
Darwin theory of natural selection and its relation to the evolution of cryptocurrencies.
In 1859, Charles Darwin published his book “On the Origin of Species” where he wrote about the theory of evolution and natural selection.
For his book Darwin was paid in British Pound, the global currency known from 750 A.D. At that time, Darwin did not realize that the British currency would be subject to his theory of natural selection after the invention of block chain technology 150 years later.
Natural Selection is described as a process during which certain features become common in a population and it is a foundation for the theory of evolution. It is a result of competition between these features in a given environment and is also called “survival of the fittest”.
Definition of the traditional traits of currencies helps to better understand how natural selection applies to them.
For a long time, gold has been used as a means of exchange and a commodity. Being non-consumable, fungible, scarce and durable, gold soon turned into a leading form of money.
The traits of gold and other precious metals provided the foundation for the next evolution in money, fiat currency.
The new currency possessed traits that were even better than gold had. Paper was more portable and could be easily transacted. Still, fiat currencies were not durable and could not remain scarce.
The survival and success of any currency depends on the possession of such trait as centralized sovereignty, which leads to the issuance of new forms of money.
According to the data of May 2014, about 193 recognized fiat currencies were in circulation.
Through its history, fiat currency evolved from a hybrid supported by a valued commodity to a form that has no physical backing. Today, there are no a single gold backed fiat currency.
After the invention of block chain, cryptocurrency was created. New cryptographic-based form of payment was decentralized and programmable and could realize a wide array of functions.
Extinction is defined as an inability to compete in an environment that leads to a cease of existence. Currency is not always the dominant specie that will survive. In an era when a lot of fiat currencies go extinct, gold endures.
Charles Darwin’s theory of natural selection enables to understand its implications on the future of currency.
DollarDaze.org has recently conducted a study of 775 fiat currencies and stated that the average life of a fiat currency lasts for 27 years. According to the study, the main causes of currencies extinction are monetary reform, hyperinflation, war and independence.
Gold has maintained its high value in the era of fiat currency and is still the main alternative store of value. Now the competition between these stores of value is based upon such traits as scarcity and durability.
The arrival of cryptocurrency added increased competition. Although bitcoin is the most widely known digital currency, over 200 cryptocurrencies have been established in 5 years of its existence.
The currencies continue to obtain traits that allow them to compete in their own ecosystem.
The conditions of the competitive environment are constantly changing. Today, the rising distrust in centralized entities provokes people to use alternative stores of value.
It is now difficult to imagine Charles Darwin debating the opinion that cryptocurrency will be a competitive force against traditional money. Moreover, it is unknown whether or not he would forecast the survival of cryptocurrency and whether he would exchange his British Pound for it.