Can the ADA become Sound Money?

A blockchain is essentially a trust machine. It is able to gain people’s trust and ensure that some data or information remains unchanged forever. People started talking about the possibility that we can create sound money based on blockchain technology. We know how sound money looks from the economic point of view but we do have not a clear definition of how it should look from the technological point of view. Let’s explore how far we are and what we still have to achieve. We do not know the answers to all possible questions. Do not hesitate to let us know what you think about the topic.

What do you expect from a bridge? It is stable since you want to safely get to the other side. It is similar to sound money. Stability is the key feature.

Sound money and gold standard

Sound money is a kind of money that is not prone to sudden appreciation or depreciation in purchasing power over the long term. The stability of sound money is achieved through self-correcting mechanisms that are part of the free market system. We can say that supply and demand determine the purchasing power of sound money.

The concept of sound money evolved in the 19th century as many countries adopted the gold standard. It became associated with commodity money or hard currency. The country currencies or paper money has a value directly linked to gold. Countries agreed to convert paper money into a fixed amount of gold. A country that uses the gold standard sets a fixed price for gold and buys and sells…