Cryptog’s recent post got me thinking. Greece is currently going through some serious problems. Lots of economies around the world share similar financial problems. It has been suggested by @JordanLee that if the USD ever suffered from a total collapse, NuBits could be re-pegged to a different more stable currency. Seeing as how all these economies are so interconnected though, what if the problems in Greece or another country triggered a chain reaction, which led to the collapse of most major currencies, USD, Euro, etc…
I don’t know how realistic such a scenario is, but let’s just say it happened and because of this systemic crash, there was no other stable currency left to re-peg to. In a situation like this, wouldn’t NuBits have to transition from maintaining a peg to a role more similar to the Federal Reserve and its main objectives? Shareholders would need to maintain a global digital currency and make decisions about when to increase or shrink the money supply. The concern for shareholders instead would be worrying about whether the supply of NuBits was growing fast enough to match the economy and the people that needed to use it.
Hopefully that made sense. If not, I’ll just restate my main question. If all major fiat currencies failed because of a worldwide systemic economic crash and there was no stable currency left to re-peg to, could NuBits find another way to survive without its main role of maintaining a peg?
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Pegging to a basket of goods would be the way to go as that would be what people were doing anyway when trying to estimate the value of NBT.
But I don’t think that would be a real peg anymore. Instead you could read the value of NBT by looking at the basket of goods.
That would only be true in a world with no stable fiat currency left.
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First of all I do no think we would witness the complete collapse of FIAT currencies but only the devaluation of certain currencies, mainly the US dollar and the EUR compared to mostly the YUAN.
But assuming that there is a crash, I do not think it would be a problem for NuBit to remain pegged to the US dollar unless there is total loss of confidence in the US dollar, because what matters is not the purchasing power of a single NBT but the peg to a stable FIAT currency.
In case the USD is no longer receiving confidence, we would need to re-peg to another currency (the YUAN?) or a basket of currencies.
In fact we are about to shift from a Bretton Woods world that makes the US Dollar the world reserve currency to a new era (according to my info it would be done on 01JAN16) where the world reserve currency is a basket of currency, a fair balanced SDR that reflects the real economy, where the Yuan would have 20% of share, the USD as well, the EURO 12%, the JPY 8% etc…
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What do we mean hear by collapse or crash of the dollar?
If it just means RV to the yuan, then NBT would just lose its purchasing vs the yuan.
If it means not being used by the american ppl because they dont trust anymore or its inflation goes crazy, then we got a problem and we better switch our pegging to a more reasonable non rothschild central bank like what we have in China or Russia