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The same thing that makes one fiat currency more valuable than another -- the demand/supply/confidence for that currency.
by dvcc 9y ago
The same thing that makes one fiat currency more valuable than another -- the demand/supply/confidence for that currency.
- leot 9y agoTaxes, central bank, military, and existence of cash all preserve value of fiat. And, further, fiat currencies aren't perfectly liquid with respect to each other.
- dvcc 9y agoForex markets are basically as liquid as you can get -- of course some exceptions, but I think the idea still holds. While an existing fiat currency might derive its confidence from different sources than that of a digital currency (taxes, military, etc. vs. blockchain, mining, contracts, etc.), it does not make them that different. People still declare the coins value on that confidence/demand.
- leot 9y agoYes, definitely on the forex thing. But with cryptocurrency-level liquidity there is no reason for any normal consumer to hold funds in any particular crypto currency (or any at all), since they can exchange them cheaply and quickly on demand. That is, unless they're speculating it will increase. But this increase presumes scarcity. And so the question is: whence scarcity?