Understanding the money supply and demand in BCH
The price or purchasing power of Bitcoin Cash, is formed as in all goods, by supply and demand. This means, that 3 trends can be presented, with the same amount of BCH, we can buy more, less, or the same goods and services in the future.
If demand increases as well as supply, the purchasing power of money rises.
If demand falls for equal supply, the purchasing power of money is reduced.
If supply increases with equal demand, the purchasing power of money decreases.
If supply decreases with equal demand, the purchasing power of money increases.
If supply and demand increase equally, the value remains constant.
If supply and demand decrease equally, the value remains constant.
During this article, we will discuss the different sources by which the supply and demand of money can increase or decrease.
Money demand:
Industrial: it is understood as the demand for a good for consumption or production (for example, gold and jewelry). In the case of BCH, there is a natural demand on its own payment network (Blockchain), to make payments and to cover transaction fees. On the other hand, the transaction costs (fees) paid by the transactions of the SLP (Simple Ledger Protocol) tokens or NFT (Non-Fungible Tokens), are payments in BCH, therefore BCH is required to send them.
Monetary: it is demanded to use it as a medium of exchange in the future, to access goods and services on the market. Currently we see that there are many businesses around the world that use BCH as a form of payment. Also, there are many web pages that allow you to use your BCH.
Expectations: are the future projections that people have about their money. It is the future purchasing power that they believe their money will have, to exchange it for other future goods and services. In the case of BCH, the expectation tends to be positive (that BCHs will be more valuable in the future), as their issuance is limited and their adoption is booming.
This demand for money is coordinated through the market with the supply. The offer of Bitcoin Cash, differs abysmally with the current fiat money. BCH ignores, and overcomes all the problems of the money supply in the world today, from financial repression, inflation, and excessive liquidity, lack of coordination of savings and investment through credit.
Money supply in today's world:
Public deficit: Currently the states use monetary issuance, in order to cover the public deficit, in this way, the amount of present money and future expectations are expanded. In the case of BCH, the issuance is out of State control, therefore; there is no issuance of Bitcoin Cash to cover public deficit.
Fractional reserve: this system allows banks to multiply money; since, their current account balances are provided in the form of credit (except for the% of reserve requirements).
Also, this credit is usually used to finance the state, and cover the deficit. In BCH there are no banks, as long as you do not use custodial services, you are the sole owner of your coins. However, exchange or custodial wallets (which do not give their users responsibility for their keys), can show users that they have BCH, which the company does not have. However, the incredible invention of Satoshi Nakamoto, allows us to verify that there are no false bch; through reading the blockchain.
Open market purchases: the state creates money, and buys securities on the stock market with that new money. With this method, the state saves the companies that they decide. This process creates a climate of financial repression; Investors are forced to purchase high-risk, low-return assets. Low-risk goods have already been purchased by the state; that fattened their balance sheet (currently the balance sheets of central banks are the highest in history). In BCH the issuance process is totally different; central banks do not have the power to print bitcoin cash, this prevents the purchase of securities on the stock market, and denies that central banks can fatten their balance sheets.
Unpredictable issuance: The issuance of fiat currencies is linked to the taste of the current policy. Otherwise, in Bitcoin Cash the issuance is pre-programmed; therefore, from the first block we know how many bch will exist, and approximately when. Its maximum at 21 million, which makes it deflationary money, the ideal monetary system.
The offering at BCH is a strong one with no break points. Bitcoin Cash is the ideal financial system for a more complex, free and economically globalized world. It is a money that once it has great adoption, it will allow the generation of free prices.
The demand in Bitcoin Cash is where you have to focus as a community; increasing the utility of bch in the world, and thus making the demand for currency grow. The greater the quantity of goods and services that can be exchanged for BCH, the greater the utility of BCH, and its purchasing power will increase.
