Happy Star Wars Day ?
If you think about it, the internet is kind of like the Outer Rim. The currencies have similarities. FIAT currencies in the real world are like Republic Credits while crypto currencies, quickly becoming the currency of the internet, are like the Outer Rim currencies. In The Phantom Menace, Watto tells Qui-Gon “Republic credits are no good here. I need something more real.”
You may be wondering, was the Outer Rim always using alternative currencies to the Galactic or Imperial Credit? The answer is no, not really. During the Galactic Republic era, the Galactic credit was the de facto currency. Before The Phantom Menace, there were only a handful of alternative currencies used in the Outer Rim, often illegally. When the Clone Wars started, the Republic and the Confederacy started taking out loans from the Intergalactic Banking Clan (the equivalent of Federal Banks in the Star Wars universe). As the war raged on, interest rates grew to 25%. Insane, isn’t it!?
As the war costs continued to rise, the Intergalactic Banking Clan (IGBC) began recognizing new currencies, mostly in the Confederacy territories. At one point, there were as many as 22 new currencies per day.
On top of that, the Galactic Credit used to be based on the value of aurodium, a rare and valuable metal much like the US Dollar was based on gold. Soon after the Clone Wars started, the Republic ditched the aurodium standard in favor of a credit line with the IGBC to try to keep the credit value stable. Unfortunately, those loans and the high interest rates caused the Galactic Credit to lose value and inflation grew out of control. We know this as the Millennium Falcon cost somewhere around 10,000 Credits but later on in the Star Wars saga we learn that the cost of fuel just to fly the Falcon is 5,000 Credits.
Does any of this sound familiar? Abandoning a precious metal standard. Massive spending. A rise in inflation. Tens of new currencies per day. Sounds a lot like the current financial setting. There seems to be a new crypto currency every day, some go on to be highly valuable while others lose value or are used for very specific purposes.
It’s an exciting time for crypto currencies, especially as interest continues to grow. Who knows maybe we’ll see some Star Wars currencies minted? Imagine a Republic Credit or a wupiupi token!
May the force be with you,
The Blockchain.com Team
May the fourth be with you was originally published in @blockchain on Medium, where people are continuing the conversation by highlighting and responding to this story.