DISCLAIMER: This article is purely speculative, and meant to be nothing more than a thought experiment for commentary purposes. As of the writing of this article, I have no affiliation with Apple Inc. or Applecoin. After the initial writing, I found out there actually is a cryptocurrency called Applecoin, but as far as I am aware, Apple Inc. and Applecoin are not affiliated.
For the purposes of this article, please understand that this piece is meant as speculation for commentary purposes, and nothing more.
Cryptocurrency is taking the world by storm. In a world where politicians recklessly seek to print money as fast as possible, many people are seeking an alternative. Yet the value of crypto seems to rise and fall like a roller-coaster.
One of the big reasons for the instability of crypto is that it is speculative. It isn’t backed with anything of real-world value. Sadly, neither is the U.S. Dollar. The Dollar, in its present form, is merely a convenient tool for trading goods and services. (The U.S. Dollar is no longer backed in gold.) But crypto has an appeal in that it is finite. Only so much BitCoin will ever be created.
Gold was used for centuries as a currency because it backed itself in its own objective value. Gold can be used for jewelry and electronics, along with other purposes. Other materials have also been used as currency, such as silver, salt, and seashells.
So what if crypto could be backed by something of real, objective value? Perhaps it could be backed in gold. Or, perhaps crypto could be backed in digital assets that have value.
Enter AppleCoin
Imagine if a company like Apple created AppleCoin, a currency that could be used to purchase one song download for each AppleCoin. This would mean that AppleCoin would have value for as long as Apple had songs that could be downloaded. This would be the primary “fixed” backing, but other options, such as purchasing iPhones, games, audiobooks, stock, and other digital and physical products would be available as well. While the price of one song would be “fixed” to the value of one AppleCoin, the price of a new iPhone could vary accordingly.
This system, or one like it, would solve the problem of Crypto not being backed by any value, because, at the very least, the owner of an AppleCoin would have access to one song download, for as long as the company exists.
Interestingly, Apple would not necessarily have to limit the supply of AppleCoin, because as long as the “value” of one AppleCoin is worth more than the value of one song download, people would continue to trade with AppleCoin. And if/when AppleCoin sees significant inflation, many owners will simply spend their crypto for Apple products (many of which will have a fixed price for AppleCoin.)
The value of these privately-back cryptos would also be backed in the reputation of each specific company, which would incentivize each company to preserve the value of their relative cryptocurrency. In other words, the value and reputation of a company and its currency would be interconnected, creating a high incentive to preserve both.
What About The Risk?
Whatever one believes about government money, having private, free-market alternatives has quite a few obvious benefits. There are obviously risks as well because any given company could go under at any time. But of course, this is comparable to the risk of investing in the stock market vs putting your money into a savings account. (Both have risks.)
One thing that I’ve learned from studying economics is that everything in life has a risk. A lot of people want the government to guarantee economic security, but the President is not God, and centrally-planned economies are notorious for failure. Politicians can make all of the promises they want, but a blight could destroy large portions of the world’s agriculture tomorrow. Praise God for 21st-century technology and industry, but we have to remember how fragile these things are.
The Bible itself talks about how earthly wealth can be destroyed by moth and rust. Scrooge McDuck may have a lot of gold, and good for him, but the breath in his nostrils is a gift from God, every moment of every day.
At the end of the day, there are no guarantees. Everything in economics involves risk, it’s just a question of which risks and benefits outweigh the others.
Conclusion
AppleCoin as a thought experiment brings with it some interesting implications. Private companies could create forms of cryptocurrency that are backed by digital assets and the company’s reputation (and vice-versa). While nothing in this life is guaranteed, this would allow competition in the form of alternative currencies in the economy.
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