Photo: HODL TKO / Tokocrypto

3 Reasons Why You Should Dump Fiat Currencies and HODL Toko Token (TKO) Instead

Prior to the 1930s, the global monetary system operated using the gold standard whereby the value of one unit of a currency is pegged to the price of a fixed amount of gold. However, the golden days of currency ended after the Second World War (WWII) when the Bretton Woods Agreement was signed in July 1944 which paved the way for the United States Dollar (USD) to replace gold as the peg for other currencies though the USD itself will be backed by gold reserves held by the United States (U.S) government. In 1973, the Bretton Woods system collapsed when the then U.S President Richard Nixon abandoned the gold standard after which countries were free to either link their currencies with that of another country or a basket of such other currencies or to adopt a free float mechanism operating based on market factors.

From 1973 onwards, the global monetary system operated using the fiat currency system whereby the value of a fiat currency is the legal tender value as ascribed by the country itself with the onus being on the country’s central bank to maintain the value and exchange rate of its fiat currency vis-à-vis those of other countries depending on its choice of control mechanism. No doubt fiat currencies have brought about much efficiency in the guise of expediency in line with the meaning of the term “fiat” which is Latin for “let it be done” whereby these currencies have served as a more than capable medium of exchange to facilitate the trading of goods and services. On the flip side however, fiat currencies have given rise to conceptual discrepancies not least of which is the rising seigniorage levels of such currencies which have resulted in systemic issues pertaining to the instability of these currencies as well as rising inflation levels and low interest rates on a macro level.

The Cons of Fiat Currencies

The inherent instability of fiat currencies was laid bare during the Asian financial crisis which started off with the rapid depreciation of the Thai Baht (THB) after the Thai government’s decision to unpeg the THB from the USD on 2 July 1997 whereby this triggered a chain reaction that culminated in East Asian currencies recording a collective fall in value of 38%. In many ways, the Asian financial crisis highlighted the financial contagion risks of fiat currencies which can be said to have no intrinsic value except for its legal tender status as ascribed to it by the issuing government that paves the way for its general acceptance and use in the market. During times of political or economic instabilities, the vulnerabilities of a fiat currency could result in its value succumbing to a free fall as illustrated by the loss suffered by the Turkish Lira (TRY) in December 2021 of about 40% of its year-to-date (YTD) value against the USD due to a host of factors including political tensions between Ankarra and Washington over their differing views on the Middle East and the ultra-high inflation levels in the Turkish market.

The issue of currency depreciation is a pertinent one as it tends to result in goods particularly imported ones costing more which in turn raises the inflation levels. This is certainly bad news for the ordinary man on the street as it effectively means that the basket of goods which can be acquired using a single unit of the national fiat currency has been reduced due to no fault of their own. Worse still, under fractional reserve banking frameworks which are subscribed to by almost every bank from around the world, there is generally an inverse correlation between the levels of inflation rates with those of interest rates. Long story short, high levels of inflation usually means low levels of interest rates which effectively brings about a double whammy for the ordinary man on the street because on top of having less purchasing power for the fiat currencies in their hands, they also have to make do with lower levels of interest rates for the fiat currencies in their fixed deposits. Fair to say, the fiat currency system is imperfect at best and flawed at worst.

Photo: Fiat Currencies Map of the World / Indy 100

The Pros of HODLing Toko Token (TKO)

The issues afflicting the fiat currency system are precisely what makes the crypto financial system such a promising alternative. Granted, the crypto financial system is a new kid on the block when compared to the fiat currency system whereby the former too is far from perfect as it have had to grapple with issues of its own, this does not detract from the fact that the conceptually different modular framework of the crypto financial system particularly its decentralized feature may render it to be a pretender to the throne of the global financial system. With crypto becoming increasingly mainstream with every passing day and fiat ramps serving as the bridging mechanism which helps unlock the value of the fiat currency system by transferring it to the crypto financial system, it may be apt to consider the use of cryptocurrencies as viable alternatives to fiat currencies and here are 3 reasons why you should dump fiat currencies and HODL TKO instead:-

Reason #1: Capital Growth Prospects

TKO holders have the option to harness the power of decentralized finance (DeFi) to grow their capital investments by staking their TKOs with a host of platforms including Autofarm, BiSwap, Moonfarm and PancakeSwap. TKO’s capital growth prospects stand in contrast with the low interest rates of fiat currencies with central banks across the globe projected to be keeping interest rates at below inflation levels with some being near zero in 2022.

Photo: TKO Staking Platforms / Tokocrypto

Reason #2: Inflation Management Mechanism

As part of Tokocrypto’s efforts to manage the inflation levels of TKO to ensure it functions optimally as a utility token, we have devised the quarterly TKO Burn mechanism whereby every quarter Tokocrypto will utilize 10% of the revenue generated based on the trading volume on our crypto-to-crypto platform to burn TKOs, up to 10% of total TKO token supply. TKO’s properly managed inflation levels stand in contrast with the high inflation levels affecting fiat currencies as exemplified by the U.S whose year-on-year (YoY) inflation rates had in December 2021 soared to 7% which is the highest since 1982.

Photo: TKO Burn / Tokocrypto

Reason #3: Store of Value

In order to warrant the stability of TKO, Tokocrypto has devised a governance treasury framework for the token which has played a key role in TKO’s reliability as a store of value as indicated by the minimal deviation in the token’s simple moving averages (SMAs) and exponential moving averages (EMAs). TKO’s reliability as a store of value stands in contrast with the depreciation risks of fiat currencies which are particularly pertinent in relation to currencies that are subject to the floating exchange rate regime.

Photo: TKO’s SMAs and EMAs as of 19 January 2022 / TradingView

In the same way that the fiat currency system has dethroned the gold standard, the crypto financial system is increasingly posing itself as a viable alternative to the fiat currency system. Although the jury is still out as to the extent to which the crypto financial system is posing a threat to the fiat currency system, what is clear is that the crypto financial system led by TKO is giving the fiat currency system a run for its money.

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