Ignoring the volatility and environmental concerns, why shouldn’t all these small to medium-sized countries standardize on a cryptocurrency?
Controlling your money supply can be needed to improve your country's position with regard to foreign trade. Greece would probably have been better able to manage its recent debt crisis had it controlled its own currency rather than being tied to the Euro, for example.
> Ignoring the volatility and environmental concerns, why shouldn’t all these small to medium-sized countries standardize on a cryptocurrency?
Because people still need to be able to transact with something, which is not a function well-served by cryptocurrencies, most of which have the bulk of trade in them carried on off-chain or via stablecoins that track a fiat currency.
That’s a bit like saying the dollar isn’t a suitable currency because most transactions don’t happen directly through the Federal Reserve. Most people would transact through “layer 2” systems like Lightning, or even paper currency issued by one or more countries but backed by cryptocurrency reserves.
The cryptocurrency bit is to allow mutually distrusting countries to standardize on a single currency, if that’s something that might be valuable.
This is basically protectionism, an economic theory that has been debunked time after time. If it were true, then why doesn't it hold true for individual states within a country? And while we are at it, why not a currency for every city or neighborhood?
> Because people still need to be able to transact with something, which is not a function well-served by cryptocurrencies, most of which have the bulk of trade in them carried on off-chain or via stablecoins that track a fiat currency.
Those same systems could simply add support for cryptocurrency. Paypal did a few months ago (not sure if they enabled merchant support or p2p transfers, but there's no technical barrier preventing them to do so). Credit cards could also add crypto to the long list of currencies they already support. Etc.
They simply don’t make anything to sell that has value other than tourism and natural resources.
Trade imbalance has been an issue for decades and they simply hid the problem by taking out loans.
They have simply run out of credit.
My two cents
To get as screwed up as this you can only achieve with centralized planning, where a single decisionmaker mistake can mess up the sustenance of millions.
Good chunks of the North are still somewhat off limits and fucking littered with landmines too.
Also, most countries end up managing their currency reasonably well (better than having a fixed money supply). Sri Lanka is in the news for failing, but most nations are quietly doing reasonably well.
Do you have a source to back that up? I can think of many countries where it was done successfully (e.g. Hong Kong, UAE, Panama, etc.).
Lots of deflation or inflation has bad effects by influencing how people spend.
Because money has a liquidity premium that allows you to disregard location, to make money less liquid you have to bind it to a national economy, otherwise buyers might decide to only import products from a handful countries. Look at Greece they run a trade deficit because German products are cheaper, this means Greek debt is impossible to unwind until Germany starts importing from Greece.
What happens if one of the countries needs to print some money to get out of a bind?
What happens if external countries don't want to receive the crypto in exchange for imports/exports?
I dont think crypto makes any of the above any better than an existing currency owned by the fiat banking system.
Controlling interest rates is incredibly important, especially in times of crisis. If you were pegged to the USD right now (which is skyrocketing relative to most other currencies), you would be in trouble.