THEY used to say that cryptocurrency is the wave of the future and that your block chained account will be well protected by a system of unbreakable codes. Your money, which will be converted into cryptocurrency, will be backed by an anonymous CEO (chief executive officer) operating the “banking system.” There is no need for any law or regulation to protect the public.
Enter Sam Bankman-Fried, son of college professors who made $8 billion in customer funds, disappear. He has been indicted for fraud, and is facing other criminal charges but was released after posting a $250-million bail while awaiting trial. The collapse of FTX, the crypto giant that he founded and whose money he spent as if it were his personal bank account, does not speak well of the future of cryptocurrency.
Cryptocurrency is scandal racked. Even the Pentagon is investigating it.
In December 2021, BTS, the Korean pop group who calls their fans as ARMY — short for “Adorable Representative MC for Youth” — was shocked to learn that ARMY Coin, a Singapore-listed cryptocurrency company, was marketing the digital money in their names. The band denied association, and Singapore suspended the trading in the currency. Even Hollywood celebrities are urging their followers to invest in cryptocurrency, and Kim Kardashian was fined by the US Securities and Exchange Commission the amount of $1.26 million for failing to inform the public that she was paid $250,000 to push the crypto token EMAX. The behavior of cryptocurrency, it appears, does not mimic real money which it is supposed to replace.
Whenever money is issued, it should be adequately backed by something more tangible than the words of a person using computer apps. Monies during the Spanish period were minted in gold or silver and smaller change in copper.
The coins bore portraits of the king or queen and the coat of arms of the Spanish state. These were backed by the intrinsic value of the coin, whether in gold or silver. You could actually melt the coin to obtain its face value. Even the paper notes issued by the short-lived Philippine Republic of General Emilio Aguinaldo were printed subject to the authorization issued by Aguinaldo’s government under “Ley 24 Abril 1899.”
In 1898, after the sovereignty of the Philippines was transferred from Spain to the United States of America, the United States Congress had to pass a law, known as the Philippine Coinage Act, to mint coins.
After the coins were minted, they were carefully documented prior to issuance to the public. Because of the rise in the bullion value of the coins, the American Congress again passed a law on Dec. 6, 1906 recalling the silver coins in circulation so they could be melted and reminted in smaller sizes. In parallel, the Americans also issued silver certificates which were printed upon orders of Governor-General Howard Taft. Treasury certificates were also issued from 1918 to 1941, under Section 1626 of Act 2711 of the Revised Administrative Code of 1917.
On Dec. 7, 1941, at the start of the Second World War, the government was compelled to resort to crisis measures. President Manuel Quezon authorized the creation of the Emergency Currency Committee. The emergency or “guerilla money,” if printed in accordance with Quezon’s instructions, could later be traded at the prewar exchange rate of P2 per $1 after the war.
Guerillas operating in the Philippines then issued their own currencies. President Quezon’s Own Guerillas or the P.Q.O.G. operating in Tayabas issued their emergency currency. The “Marking Guerillas,” an outfit founded by Marcos V. Agustin, also issued its own currency.
Other guerilla units issued their own currencies which existed side by side with Japanese invasion money whose forced acceptance was accomplished at the point of Nipponese bayonets.
When the Americans returned to the Philippines, they brought with them Philippine money with the word “Victory” stamped on the back of each note.
In 1948, the Philippine Congress passed Republic Act 265, creating the Central Bank of the Philippines. Thereafter, all coins and banknotes were made and printed under the direction and authority of the Central Bank of the Philippines.
So you see, even the Philippines, a country oftentimes known for laxity, has been very careful in issuing its currency. Contrast this with cryptocurrency, the backing of which is nothing more than words and numerals sent through the internet.
The issuance of currencies is usually dictated by laws and guaranteed by gold or silver, or by the assurance of the government. Even the assignat, issued by the French revolutionaries during the 18th century, was backed by confiscated lands.
Maybe cryptocurrency should be physically minted and bear on the obverse the portrait of P.T. Barnum, the great circus man. The reverse should show a laughing clown with the words: “There’s a sucker born every minute” — Barnum’s favorite maxim.