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Advantages of Using Silver Crypto-Currency

Silver is one of the commodities used to backed currency so that the value of money is derived from it. Therefore unlike the fiat currency system where the government influence the value of the money. In asset-backed currency the government plays a very minimal role in the overall value of money used in a country. Therefore if a country is using silver backed currency means that the value of money is affected the prices of silver. Hence the silver supply in the country becomes the basis on which the value of currency is derived. The following are the merits of using asset-backed assets.

Silver backed currency helps in maintaining the optimal amount of money supply in the economy. This is very important because excessive money supply leads to high levels of inflation. This, in turn, leads to loss of value in the currency used in a country. Deflation on the other hand is caused by low money supply. Which may lead to adverse economic conditions. Asset-backed currency offers a way to prevent these problems from occurring. This is because silver is limited in supply thus the only way to increase money supply is to increase silver mining activities. By controlling money supply a country is able to have a stable economy. Use of fiat currency system have seen some countries experience economic difficulties. The reason is that the government may be involved in activities that affect negatively the value of a country’s currency. Therefore these countries are advised to consider using asset-backed currency.

Silver backed currency is essential in avoiding economic collapses due to bubbles. What makes silver backed currency ideal is that the value of this physical commodity is relatively stable. Economic bubbles have led to collapse of economies in various countries. This is because to a sudden increase in value of an asset that many people borrow money to acquire. The lending institutions give people loans which are beyond their wealth. People make huge loses when the asset they acquired suddenly drops in value. These economic bubbles can be avoided by using silver cryptocurrency. The physical commodity used to backed the currency should have a stable value and limited in supply. This means that all the assets in the country will have a stable value because there is stable demand for money is also limited in supply. Silver backed asset helps to avoid rapid increase in value of assets that cause the economic bubbles and collapse.

Learning The Secrets About Currencies

Learning The Secrets About Currencies