IN GOD WE TRUST was first used on U.S. paper money in 1957, when it appeared on the one-dollar silver certificate. A lot has changed since then.
Today we live in a digital world as technology and credit cards have reduced cash demand. The U.S. Treasury has even slowed down its printing of paper money with the $100 bill now the highest denomination.
Suffice it to say putting IN GOD WE TRUST on money doesn’t have anything to do with its value. It’s really a Federal Reserve note that is backed by the “full faith and credit” of the U.S. Government. Essentially, we trust that the U.S. government will cover its bets.
Public trust in government, however, remains close to historic lows, according to the Pew Research Center, with only 18 percent of Americans saying they trust the federal government to do the right thing “just about always” or “most of the time.” But that’s another story.
Enter cryptocurrency, or Bitcoin, one of the more well-known types of new digital money. While still confusing to many, these currencies were established to do away with any central authority, such as central banks or federal reserve banks, and can be transferred electronically in open and secure environments.
The Great Recession and the recent U.S. fiscal crisis have spurred interest in what is known as block chains, sort of a global online depository using distributed computing where each crypto currency value (or Bitcoin) is registered. This eliminates the “middleman” (aka the Federal Reserve) so that the digital currency is not tied to any financial institution.
We trust our money in banks are secure. Depositors, however, may not be aware that U.S. banks are only required to have reserves of 3 percent for checking accounts and 0 percent for savings accounts. So, if a bank collapses, which many have done and continue to do, account holders may not get their money back. Ever hear of a bank run? Scary, isn’t it?
This is the bet for digital currencies like Bitcoin as highlighted in the 2016 documentary, “Banking on Bitcoin.” Many monetary and financial experts have varying opinions on the future success of cryptocurrencies. Although U.S. stock markets are at all-time highs, economic uncertainty is still a major concern among most Americans as well as people around the globe.
It may be some time before the U.S. and the world for that matter embrace Bitcoin and other cryptocurrencies. Trust needs to be earned, so adoption may be later than sooner. But others are betting big time on digital currency. Consider the fact that at the time of this post, one Bitcoin was valued at $15,694.26. In July of 2010, it was only $0.08.
So, in homage to the recent film, “Star Wars: The Last Jedi,” trust in Bitcoin, we must.