by Marvin Dumont
Apollo Foundation is developing an all-in-one cryptocurrency that will offer the best privacy features anywhere. But Apollo (APL) is also different in a key aspect: It features 0% inflation unlike sovereign fiats and many top cryptos.
A 0% inflation currency preserves consumers’ and investors’ wealth by maintaining (or increasing) their purchasing power by way of scarcity. Here’s the problem with inflation: The extra cash dilute the money supply, making each paper note less valuable. The more of something you create, the less valuable it becomes. That’s why luxury manufacturers of cars and watches make limited-edition products so they can charge high prices per unit.
Unfortunately, central banks and governments have strong motivation to print billions out of thin air. The extra cash often go into the wallets of unethical bankers and bureaucrats because these operations lack transparency. Moreover, the printed cash often fund a government’s deficit-spending and/or debt borrowing.
In effect, cash-printing is confiscation of other people’s purchasing power. Many economists view such practices as indirect taxation without representation.
When governments print cash out of thin air, the value (buying power) is taken out of fiat holders’ pockets— regular folks who are forced to use the sovereign fiat through legal tender laws.
People’s fiat cash lose value through currency debasement and inflation. Currency debasement: That’s what the ancient Romans did to fund their wars and lavish lifestyle of emperors. Roman bureaucrats debased the denarius by removing its silver content — to a point where merchants, consumers, and even tax collectors found it worthless as currency.
Let’s take a look at the inflation rates of mainstream digital coins: Bitcoin (4% until BTC reaches the maximum 21 million supply); Ethereum (15%); Ripple (12%); Litecoin (10%); Dash (13%); Monero (8%); Verge (13%).
In ancient times, our ancestors typically paid with hard assets — with commodities such as gold, silver, salt, cattle, weapons, precious stones, metals, etc. The inflation rate of gold is low because it’s hard to find and mine these shiny metals. Therefore, gold investors were (and are) always guaranteed their buying power because of the metal’s limited supply.
Even if a commodity-money sees modest inflation — let’s say there are too many cows or weapons, causing a dip in valuation — the hard asset still retains its utility. You can always use a spear or arrow to hunt food.
But you can’t say the same for paper fiats. When you lose value through inflation, paper notes aren’t useful for anything else. It’s just made-up money that citizens are obliged to use because of legal tender laws.
The Apollo Foundation’s vision is to offer the best privacy and anonymity features anywhere. But APL also features 0% inflation.