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People can and do distinguish between dollars and IOUs, the IOUs are called US Treasury Bonds. Sure, they're traded at very close to face value, but that's bec
by emiliobumachar 9y ago
People can and do distinguish between dollars and IOUs, the IOUs are called US Treasury Bonds.
Sure, they're traded at very close to face value, but that's because traders trust the US government to pay. That's different for governments considered at risk of default. That could also become different for the US government, if the economy really goes south or if enough people start talking about defaults.
I don't see how criptocurrencies would change any of that. For how much less than 1 BTC would people trade a 1 BTC IOU backed by the US government?
- SilasX 9y agoI’m not talking about bonds, but fractional reserve banking, where a bank will credit two accounts with $1 when it has only $1 in cash. Edit: As it stands now, there is a "lender of last resort" that can create new money as needed to fill in the gaps if those two account holders want to get their money out, so there's no need to distinguish the original vs bank-created money. But you can't create new Bitcoins, so there is a reason to distinguish Bitcoins on the blockchain vs those IOUs.