Inflation versus Deflation

Remember those groceries you bought on the weekend — well they used to be cheaper. Years ago, a twenty dollar bill would have served you well, stocking your fridge full of food for the week. Now twenty dollars might only get you a meal or two at McDonald’s.

That’s inflation for you ladies and gentleman.

It is why although things seems that things are getting more expensive, in reality, it’s that your money is worth less than it used to be. This happens because more and more money gets printed into circulation, reducing the scarcity and the value of your money. In extreme cases, this can cause rampant hyperinflation that can be disastrous for an economy. Just ask the people of Venezuela. Or Zimbabwe.

Introducing a new form of currency

Anyone who has participated in the Bitcoin craze for longer than a couple months knows this is not the case with cryptocurrency. While it’s true that, if you bought Bitcoin in December at its all-time high, you would not have increased the value of your investment yet, the general trend over time is that Bitcoin is deflationary — in other words — it increases in value compared to government-issued money and the goods and services you might purchase with it.

This is because Bitcoin has a limited supply. It is not printed whenever a given agency sees fit to create more. Therefore, it increases in value because of the consensus of supply and demand. The same is true of many cryptocurrencies, including ETK, or EnergiToken. The value of this token is that it can be traded for energy — using it to buy or sell electricity, for example — or to pay monthly utility bills. Importantly, it can also be saved as it is held by the participant for them to decide how to use the deflationary currency.

This means that a holder (or hodler) of digital tokens is motivated to save their currency instead of spending it. They are encouraged to accumulate the currency rather than fritter it away on frivolous items. It also means they can be incentivised to act differently when offered a digital currency in exchange for a given activity, like conserving energy.

Adopting a token approach to solving problems

Tokens, as a reward, not only serve as a monetary incentive to encourage behaviours, they can serve as an investment tool, as well, since they are inherently deflationary. What if tokens were used by government agencies or businesses to change behaviour, such as reducing energy consumption or cutting out polluting behaviour? What if consumers could choose to save their awarded tokens or use them as currency to pay for everyday costs, like their utility bills?

Money is becoming more and more digital in nature in society. It’s cheaper, more convenient, and faster than old-fashioned cash. A move to fully digital money is likely in the not-too-distant future. In a few years, it will be perfectly normal to only carry money in a digital form. Adoption of tokens, such as ETK, could become a prevalent means of transacting value for a given commodity — in this case, energy.

It’s only a matter of time

How might this adoption occur? It will occur gradually, as consumers recognise how well the value of their digital currencies is holding up against government-issued currency. When consumers begin trading their tokens for commodities they use in their everyday lives, the value will become readily apparent. As money only has value when there is consensus, digital currencies like ETK will continue to grow in value against the commodities they can purchase and trade. This will encourage further adoption and interest in the currencies — and better management of energy resources.

It’s only a matter of time before currencies like ETK are adopted by the masses.