In the cryptoscene, knowledge about how the Bitcoin is created is relatively widespread. But what about the Euro? How exactly is our legal tender scooped and what effects does this have? This matter is rarely touched in the world of crypto currencies. Therefore the cryptogel creation – the mining – is to be compared here with the way the euro was created.
Whoever deals with the Bitcoin will also deal relatively early with the topic of the emergence of the digital currency: By mining new blocks, Bitcoin is created, which goes as a block reward to the miner who was the first to calculate the new block. Far less known, however, is how exactly the euro is created.
In our everyday life it makes no big difference whether we store one euro in cash or in our account. For the banks and the state, however, one euro is not one euro: there are three different ways in which a euro is created.
For the Bitcoin news, one euro is not one euro
Coinage money is purely state money: it is minted and put into circulation by state mints. The Bitcoin news between the minting costs and the nominal value of the coins flows into the state coffers.
Paper money, i.e. banknotes, is printed by the central bank. The central bank then lends the money to the Bitcoin news commercial banks, which put it into circulation via the ATMs known to us.
The third form of money creation is a special case: the girl’s money. These are the digital Euros on our accounts. Giral money accounts for about 86 percent of the money in circulation in the euro zone, the largest share of payment transactions.
Bitcoin news is produced in three different ways
The creation of Bitcoin news: commercial banks can create 100 euros from 2.50 euros
This money is not produced by a state or public institution, but is put into circulation by commercial banks in the form of loans. So every time a loan is taken out, the bank creates new money. Although it cannot draw on an endless amount of financial resources, in order to generate 100 euros of bank money, it only needs about 2.50 euros of “central bank money”.
(The central bank can lend money to banks either in the form of banknotes or as digital “central bank money” – which is a special form of money).
The potential effects of a worldwide use of Bitcoin as a means of payment can of course only be speculated on. Nevertheless, the thought experiment will be dared here and possible advantages and disadvantages of Bitcoin and Euro, which are already anchored in their money creation, will be compared.