If you travel to Japan you need to convert your US dollars into Yen. The currency exchanges at the airport will charge you 7% each way (USD-->JPY-->USD), for round trip vigorish totalling 14%. If you use your credit card the fees are not quite so high, but still outrageous.
It’s like that for every country. You can’t even catch a break in Canada. Yes, greenbacks are widely accepted by our neighbor to the north, but at a price. A store will probably charge you 10% for the privilege. And woe to Canadians travelling to the USA--once you get south of Plattsburgh, NY, or Blaine, WA, your money is practically useless.
So one can sympathize with the euro project. My German friends used to carry bags of coins around with them to use while on day trips across one border or another: not just Marks, but also Francs, Guilders, Kroner, etc. The euro flattened it all out, and for the tourist trade it was a godsend, universally acclaimed by citizens everywhere who could go shopping in Belgium, France, or Germany without any currency headaches at all.
Though the euro has not fared that well. It turns out that a tourist’s convenience is not the primary test of a currency. At the end of the day the balance of payments must balance--that is, a country’s debits and credits have to match up. Greece was spending lots of euros buying German manufactures, and getting those euros back required them to borrow money. Lots of it. Greece is now completely bankrupt.
Without the euro Greece would certainly have big problems, but it likely wouldn’t be in debt up to its eyeballs. Arguably the euro has made the situation in Greece, along with Italy, Spain, and even France, much worse. It looks like Europe will eventually shed the euro and its citizens will go back to paying exorbitant currency exchange fees.
So there are reasons why countries have separate currencies. A currency zone isn’t just a matter of coinage, but depends on culture, language, banking rules, business habits, and comparative advantage.
Is there a way out of this mess? I argue yes, and the answer is cryptocurrencies.
No, I am not suggesting that we all go on bitcoin and expect to live happily ever after. If Europe can’t even support a single currency, then how much less the rest of the world? Germany and Greece use their currencies in different ways.
But we don’t have to divvy it up by national boundaries. Instead, let’s ignore political borders and consider different industries.
I was inspired to think about it this way when I ran across something called bunnyToken. It’s an ICO (initial coin offering) that aspires to be money for the adult entertainment industry. (That this particular ICO is widely believed to be a scam does not affect my larger point.) BunnyToken wants to be the money you will use if you want to buy a porn video, go to a strip club or hire a sex worker, etc. The intention is that you can use it for that purpose anywhere in the world--no exchange fees necessary.
Two points:
1) The adult industry is usually at the leading edge of new technology--witness VHS, internet payments, livestreaming, etc. That’s partly because the customers are not especially price-sensitive, but mostly because the industry is typically excluded from normal financial and distribution channels. So they have to invent their own. The fact that they're experimenting with their own currency is an important milestone.
2) BunnyToken has to guarantee anonymity and reliability. On the other hand, transaction times don’t have to be that fast (10 minutes should suffice), nor do transactions have to be all that cheap. Because transactions will likely be for relatively small amounts of money, super-tight security may not be necessary.
Think how sensible this is. Porn is porn, whether in Thailand or the USA. The prices won’t be the same--the law of comparative advantage still holds--but there is no reason why it has to be exchange rate sensitive, dependent on a nation’s macroeconomic variables. Let the porn industry have its own currency.
I can easily imagine any number of other bespoke currencies. A TouristCoin would be wonderful. Just imagine if I could pay for hotels, airlines and cruise ships around the world using a single coin. The specs on this money will differ from bunnyToken. It definitely should NOT be anonymous--I want to prove that I paid my hotel reservation. Transactions might be large, so security will be more important.
While the Greek economy overall is poorly developed, the country has a world-class tourist industry. Why should that industry be tied down by problems in the rest of the economy? Let them share a currency with tourist businesses across the globe, and let comparative advantage rule.
Similarly, a restaurant token is long overdue. Starbucks has invented a pale reflection of that with their phone app. But a real restaurant token will work anywhere in the world, from any Starbucks, to Alinea in Chicago, to a streetside vendor in Hanoi.
This will not eliminate exchange problems. After all, a pornstar may want to eat in a restaurant some day, where her bunnyTokens won’t buy her a meal. So she’ll have to exchange her bunnies for something that works in a restaurant. That could be fiat currency, which would be a very expensive solution. More likely it will be bitcoin, using exchanges like Binance. Our actress can exchange her bunnies for bitcoin, which can then be used to buy restaurant tokens. These exchanges will cost money, but far less than the 14% charged by fiat exchanges--likely only a couple percent. To be competitive it will have to be cheaper and more transparent than today's bank fees.
Like today’s fiat currencies, this proposed model is not one-size-fits-all. There will be different currencies for different industries, unlike today’s system where currencies correspond to political boundaries. Each currency will be tailored to the industry it serves, but within that industry it will have a global remit.
To make it work there needs to be a currency against which all the others can be traded, like the role of the US dollar today. I suggest that currency will be bitcoin--it has the first mover advantage, and also the largest market cap. Further, it’s stuck with an old-fashioned, slowpoke technology that has the benefit of being ultra-secure. Apps can be built on top of that to allow for more efficient and cheaper trading.
This is how crypto takes over the world. Not with one big whack, but rather with a thousand cuts. Starting with the porn industry.
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