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All currencies are based on commonly shared beliefs. I accept $20 bills because I believe other people will accept $20 bills. The paper itself is worthless. B

All currencies are based on commonly shared beliefs. I accept $20 bills because I believe other people will accept $20 bills. The paper itself is worthless. Bitcoin is the same. It's worth $9,000 as long as enough people believe they can find other people who believe it's worth $9,000. Meanwhile, trust in governments and banking systems is crumbling. We've seen the hyper inflation in Venezuela. We've seen Saudi Arabia seize 800 billion dollars in assets. We've seen the banking bailouts in the US. As uncertainty rises, a system based on math begins to look like a far safer place to park your wealth. Belief in Bitcoin may be at an all time high, but it's still the early days. Only 21 million bitcoins will ever be created. Most of them have been mined already & there aren't enough left for every millionaire in the world to own even a single Bitcoin each.

darawk 9y ago
> I accept $20 bills because I believe other people will accept $20 bills. The paper itself is worthless. That is a common misconception. Government currency has intrinsic value because you are required to pay your taxes in it. If you live in the US, whatever currency you conduct your business in, be it Bitcoin or gold bullion, the USG wants to be paid in dollars. That creates an intrinsic demand for dollars. That intrinsic demand is what ensures that everyone accepts it as a common form of payment. Because everyone has this same common requirement to pay taxes in USD. People then choose to conduct all business in it simply because it's convenient to do so. The analog for Bitcoin is a little trickier, but I think an argument you might make is that it costs Bitcoin to move Bitcoin. And therefore there is intrinsic demand for Bitcoin, because the value-transfer capabilities it provides are inherently useful.
jorblumesea 9y ago
The dollar, like any fiat currency, is also propped up by political and military power, as well as powerful central banks and gold assets. The paper itself is obviously worthless but what it represents is the currency of a unipolar superpower world backed up by $500 billion in military spending. Bitcoin has none of that. There's no bailout. There's no economic experts to come in and revise things. There's no political will to exert. Its decentralization is its greatest strength but also its greatest weakness. This is by design of course. But the argument that it's "just faith" propping up the dollar is fallacious. Apples and oranges.
dingo_bat 9y ago
> I accept $20 bills because I believe other people will accept $20 bills. The paper itself is worthless. The real worth of a US dollar bill comes from the US military. In case the value of USD starts going down, the military will do whatever is "necessary" to restore economic order.
- joshfraser 9y ago
  how does that work exactly?
  - dingo_bat 9y ago
    Suppose there is an increase in oil prices. That means the US now has to spend more to satisfy domestic demand. That invariably results in devaluation of the dollar. If this becomes extreme enough, US boots march into the middle east and "make things right" again. Another example. Suppose a bunch of terrorists crash a couple of planes into a symbol of American economic strength. Again, US drones and boots on the ground would fuck up whatever corner of the earth that needs to be obliterated in order to restore people's faith. These two are very direct actions, but most influences are far more subtle. What happens if China tries to manipulate US currency using its vast dollar reserves? It won't, because within hours a couple of aircraft carriers would show up inside Chinese sea waters. Just the existence of capability is enough to deter China.
    - joshfraser 9y ago
      What if the American people wake up to the fact that the dollar is leveraged beyond reason? And realize that it's all a house of cards? And that military doesn't think the dollars they're paid with are worth anything?

darawk 9y ago

> I accept $20 bills because I believe other people will accept $20 bills. The paper itself is worthless. That is a common misconception. Government currency has intrinsic value because you are required to pay your taxes in it. If you live in the US, whatever currency you conduct your business in, be it Bitcoin or gold bullion, the USG wants to be paid in dollars. That creates an intrinsic demand for dollars. That intrinsic demand is what ensures that everyone accepts it as a common form of payment. Because everyone has this same common requirement to pay taxes in USD. People then choose to conduct all business in it simply because it's convenient to do so. The analog for Bitcoin is a little trickier, but I think an argument you might make is that it costs Bitcoin to move Bitcoin. And therefore there is intrinsic demand for Bitcoin, because the value-transfer capabilities it provides are inherently useful.

jorblumesea 9y ago

The dollar, like any fiat currency, is also propped up by political and military power, as well as powerful central banks and gold assets. The paper itself is obviously worthless but what it represents is the currency of a unipolar superpower world backed up by $500 billion in military spending. Bitcoin has none of that. There's no bailout. There's no economic experts to come in and revise things. There's no political will to exert. Its decentralization is its greatest strength but also its greatest weakness. This is by design of course. But the argument that it's "just faith" propping up the dollar is fallacious. Apples and oranges.

dingo_bat 9y ago

> I accept $20 bills because I believe other people will accept $20 bills. The paper itself is worthless. The real worth of a US dollar bill comes from the US military. In case the value of USD starts going down, the military will do whatever is "necessary" to restore economic order.

joshfraser 9y ago
how does that work exactly?
- dingo_bat 9y ago
  Suppose there is an increase in oil prices. That means the US now has to spend more to satisfy domestic demand. That invariably results in devaluation of the dollar. If this becomes extreme enough, US boots march into the middle east and "make things right" again. Another example. Suppose a bunch of terrorists crash a couple of planes into a symbol of American economic strength. Again, US drones and boots on the ground would fuck up whatever corner of the earth that needs to be obliterated in order to restore people's faith. These two are very direct actions, but most influences are far more subtle. What happens if China tries to manipulate US currency using its vast dollar reserves? It won't, because within hours a couple of aircraft carriers would show up inside Chinese sea waters. Just the existence of capability is enough to deter China.
  - joshfraser 9y ago
    What if the American people wake up to the fact that the dollar is leveraged beyond reason? And realize that it's all a house of cards? And that military doesn't think the dollars they're paid with are worth anything?