Ans: What is the meaning of currency standard and gold standard?

In finance, the currency standard and the gold standard are two important monetary systems, each representing a different way of backing capital. The gold standard relies on gold as the basis for the value of a currency, while the currency standard relies on a specific digital currency or asset as a reserve of value. Understanding the difference between the two helps us to better understand how the modern monetary system works and to make more favorable choices in investment decisions.

The gold standard: gold as the backbone of the currency

The gold standard is a monetary system in which the value of a country's currency is backed by a certain amount of gold. Under this system, the government of a country promises to convert its currency into a fixed amount of gold, thus maintaining the stability and trust of the currency. The earliest version of the gold standard appeared in the mid-19th century, when major economic powers such as the United Kingdom and the United States of America adopted the gold standard to stabilize the value of their currencies.

Features of the gold standard
The greatest advantage of the gold standard is that it provides a clear benchmark for the value of the currency, reduces the risk of devaluation and avoids excessive currency issuance. As gold was a scarce resource, the government could not issue more money at will, thus helping to control inflation and maintain long-term currency stability. The gold standard also has its shortcomings, which are mainly reflected in the fact that when the demand for economic development grows, the gold reserves cannot be expanded rapidly, which may impose restrictions on the amount of money in circulation and thus inhibit economic growth.

Historical evolution of the gold standard
At the beginning of the 20th century, most countries began to move away from the gold standard as a result of global wars and economic crises, and in 1971, the United States announced that it was abandoning its commitment to exchange gold for dollars, marking the official end of the gold standard. This change led to a shift in the global monetary system to a government-backed fiat currency system, known as paper money or electronic money.

The Currency Standard: Digital Currencies and the Rise of Blockchain

With the development of the digital economy, the monetary standard has become a new monetary paradigm in today's world. Under the monetary standard, the value of a currency is not backed by gold or other physical resources, but by a cryptocurrency or blockchain technology. A typical example of a monetary standard is the cryptocurrency represented by Bitcoin. The issuance and trading of such currencies relies on decentralized blockchain technology without the intervention of central banks or governments.

Characteristics of the monetary standard
The most important feature of the currency standard is its decentralized and digital nature. By not relying on a centralized authority, cryptocurrencies such as Bitcoin are able to circulate freely around the world, with transparent transactions and a high degree of security. The supply of cryptocurrencies is usually fixed (e.g. Bitcoin is capped at 21 million units), which makes them inflation-resistant. On the other hand, cryptocurrencies have some challenges, such as high volatility and the lack of government backing which may be unsettling for some users.

Background of the development of the monetary standard
The rise of the currency standard is closely related to the breakthrough of blockchain technology. Since the introduction of Bitcoin in 2009, the digital currency market has been growing and attracting a lot of attention from investors and users. Nevertheless, coin-based currencies still face many challenges, such as regulatory uncertainty, technical issues (e.g., scaling), and fluctuations in market sentiment, which remain major bottlenecks for future development.

Comparison of the Currency Standard and the Gold Standard

Although the gold standard and the currency standard both protect the stability of the value of currencies to a certain extent, their operating mechanisms are very different. The gold standard relies on a physical resource, gold, while the fiat currency standard relies on digital currency and blockchain technology. The core features of the gold standard are the scarcity and physical nature of gold, while the core features of the fiat currency standard are the decentralization and transparency of digital assets.

Risks and Challenges
The main challenge of a gold standard comes from resource constraints, especially when economic demand exceeds gold reserves. In contrast, the challenges of a currency standard arise more from technology and market volatility. The higher price volatility of digital currencies, such as Bitcoin, may pose greater risks to users, especially in the short term, when price fluctuations can reach tens of percentage points.

Future development of the two
Although the gold standard is no longer the dominant monetary system today, the currency standard is still evolving. As more cryptocurrencies are created, it is expected that the monetary standard will become part of the future financial system, especially in the areas of cross-border payments, asset storage and the digital economy. With technological advances, it is likely that the currency standard will overcome the current volatility problems and achieve greater stability.

Practical application of the monetary standard: How to use cryptocurrencies?

The cryptocurrency landscape has become increasingly diverse for Taiwanese users who want to use or invest in the currency standard. For example, many exchanges offer rebate services to help users earn additional revenue during the trading process. Platforms such as OKEx provide user-friendly interfaces and rebate policies so that users can enjoy lower transaction costs when participating in cryptocurrency trading.

Choosing the right cryptocurrency platform
Choosing a suitable cryptocurrency platform is crucial if you want to start trading in cryptocurrency. In addition to understanding the platform's trading fees and rebate policies, users also need to pay attention to the security of the platform to ensure that it has adequate capital protection measures. Many platforms also offer a wide range of different digital currencies to choose from, allowing users to trade with the right currency for their needs.

Practical Steps

1. Register and complete identity verification: Most exchanges require users to provide proof of identity to ensure the legitimacy of transactions.
2. Funding: You can choose to convert your Taiwan Dollars to digital currency via bank transfer, credit card, etc.
3. Start trading: Choose the cryptocurrencies you're interested in and decide on a trading strategy based on market conditions.
4. Withdrawal: After completing the transaction, you can withdraw the digital currency to your wallet or perform other operations as needed.

Conclusion

The currency standard and the gold standard represent different monetary backing systems, with the former relying on gold and the latter on digital money. With the changes in the global economy, the rise of cryptocurrencies will gradually bring the monetary standard into the mainstream and change the way traditional financial markets operate. For users in Taiwan, the rapid development of cryptocurrencies provides brand new opportunities and challenges for both investment and daily use.