Money started out as intermediate goods involved in a transaction that otherwise would have been barter. As intermediate goods, money had to be valuable, portable, and divisible. This is how a measure of gold or silver came to be used as money. Eventually, coins were devised to standardize the weight and therefore the value of money. However, this does not explain what money is?
Much has been written on the subject of money, yet it remains mysterious and highly debatable. The key to this puzzle is the relationship between money and goods, in which goods are the wealth, while money is a claim on wealth. In other words, money is a financial obligation that acknowledges a debt owed. Simply put, money is an IOU (i.e., an informal loan agreement) that promises to repay a specific amount owed. If money is an IOU then it must be borrowed into existence.
People often say that “banks create money out of thin air”. What really happens is basically this: A borrower signs a loan contract with a bank to borrow an amount of money. This amount is issued by the bank and is represented by numbers in the bank’s computer. According to the loan contract, the borrower is responsible to repay the loan plus interest. Thus the amount of money issued exists temporarily until the loan is repaid. While the money created this way is backed by full faith and credit of the borrower via the loan contract, with value comprising the interest payments corresponding to the intrinsic value of human endeavors.
This process of money creation means that within a monetary system, the amount of money in circulation should be equal to the amount of the outstanding debt. Otherwise money would have no backing and therefore no intrinsic value.
The Axio is a project to create fully backed currency using basic blockchain technology. Specifically, a blockchain is used to secure the life-cycle of the Axio. Each Axio will be created to underwrite a loan and will be destroyed when it is paid out. This process of creation and destruction of the Axio will be secured with a blockchain. Consequently, the amount of Axio in circulation will be able to expand and contract in proportion to the demand for the Axio, while assuring that the Axio is fully backed by the full faith and credit of the borrowers. This would give the Axio many advantages over other cryptocurrencies, including a stable intrinsic value that does not depend on other currencies or commodities, free real-time transactions paid for by the interest on loans, legal basis of a security issued under the U.S. law, in addition to many other advantages the Axio monetary system will offer.
As a fully backed currency, the Axio would be able to compete with the fiat money, the value of which is set by supply and demand and people's faith in its worth. While fiat money loses value due to inflation, the Axio will have to contend with deflation, since the system will accumulate the value of the interest payments within a supply of a fully backed currency. Regardless of how the Foundation will deal with deflation, savers would be better off holding the Axio rather than fiat. Moreover, the Axio account holders will not be tied to their local fiat currencies, and any problems associated with these currencies. The goal is to be able to use the Axio as any other currency while providing advantages no other currency can offer.
For more information about the Axio Monetary System, please visit the Axios Foundation website. For an overview please refer to the Pitch Deck, with further information disclosed in the Blog, Whitepaper, Business Plan, Executive Summary and the Axio Token Terms of Sale.