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. The value of money is not affected by the government under the silver backed currency system. 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. Below are the main benefits of using silver crypto-currency.
Asset-backed currency play a major role in keeping the money supply in the economy at an optimal level. One of the causes of inflation is excessive money supply. Inflation is one of the cause of lose value in a country’s currency. Whereas low money supply leads to deflation. Which may lead to adverse economic conditions. All these things can be avoided by using silver backed currency. This is because silver as a physical commodity is a scarce resource. Thus this helps in the stabilization of the economy. Use of fiat currency system have seen some countries experience economic difficulties. This is where the government falls to manage the value of the country’s currency thus creating negative impacts on the economic. This creates a need to solve these negative economic conditions by using silver-crypto-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. Then it reaches a point where the asset value makes a sudden drop in value where all the people who invested in it make very huge losses. Silver backed currency offers a way to prevent economic bubbles from happening the first place. This is because silver like other precious stones is limited in supply. What makes the rapid increase in value of assets that causes economic crash is due high demand due to availability of funds thus limiting money supply is the solution to these economic problem. Silver backed asset helps to avoid rapid increase in value of assets that cause the economic bubbles and collapse.
