National currency values are determined by international currency exchange rates which show how much one unit of currency can be exchanged for another currency. Currency exchange rates can be floating meaning that the value can change continually based on a large number of factors or they can be pegged or fixed to another currency in which case they move in tandem with the currency to which they are pegged. Governments of emerging market countries are more likely to peg their currencies in order to create stability in the value of their currencies. By holding large reserves of the currency of the pegged nation foreign exchange rates more or less stabilize. This is done to control changes in supply and demand.
How CryptoCurrencies seek to mimic National Currencies.
National Currency floating rates are determined by the market forces of supply and demand. How much demand there is in relation to suppy of a currency determines that currency’s value in relation to another currency. Things that affect exchange rates are both geopolitical and economic which include interest rate decisions, inflation reports, unemployment rates, gross domestic product numbers and manufacturing information.
With most Cryto Currencies the supply is fixed. This fixed supply is thought comply with theories of scarcity which makes the currency more valuable when demand increases. Thus just like stocks in the stock market when one person desires a stock more than the holder they are willing to offer more money for it and thus if accepted by the holder they new price of the currency is set higher at that new purchase price.
So looking at the two we find that the Central Banks of nations can determine how much money is printed and also how much money is destroyed (or withheld) from circulation thus controlling demand in some aspects and thus value but with Cryptos the amount traded (in circulation) is determined by how much someone is willing to pay to allow it to be transfered to them thus putting it in circulation. The flaw in the structure of these Crypto Currencies is that the fixed number of them forces and increase in value relative to national currencies or more widely recognized, the U.S. currency. However the problem with this is that when the value of a Crypto Currency goes down it literally takes money out of the pockets of its holders instantaneously. In a “closed” system such as a nation the currency value does not change but what changes is the cost of goods and services via inflation, a rise in cost and deflation a decrease in cost. Thus the only way a nation’s currency losses or gains value is when the holder purchases individual goods or services which have increased or decreased in price.
With national currencies the value increases or decreases when you spend your money.
With crypto currencies the value of all of your holdings of that currency increases or decreases based on demand for it and its instantaneously.
This is the flaw of today’s crypto currencies.
These are the reasons why Cubic Currency is a fixed value currency and does float against the dollar or any other currency. Thus when you buy 1 Cubic you pay 1 US dollar or if you pay with another national currency the value of that currency against the US dollar.
However being pegged to another currency does not provide that “value” benefit that people seek. Cubic Currency solves this problem by having cash value energy backings through key energy efficient technologies. So what what does it mean when it is said that a currency is backed. Well a fiat currency is one that is not backed by anything but its value is determined by supply and demand other factors. A currency that is backed by for example gold does not necessarily have a cash value the holder can every obtain. The gold is essentially held by a nation initially for the perceived safety of it and secondarily to be used as a second currency under the theory that if the currency completely failed gold can be issued for circulation in the form of gold coins. However if a currency completely fails it is unlikely that a government would give its citizens the gold coins but more likely that it would be loaned to its citizens.
National Currency verses Crypto Currency Whitepaper