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Instead of using money that a government created out of thin air?
by kfriede 9y ago
Instead of using money that a government created out of thin air?
- TylerE 9y agoI can pay taxes, rent, buy groceries, etc with government money.
- alexbeloi 9y agoThe source of the currency is not the issue, it's the longevity/stability of it as a medium of exchange. This startup has very little power (compared to the government) to ensure that the currency will continue to hold value to someone you want to trade with. If faith plummets, they can only guarantee as many assets as they hold themselves.
- recursive 9y agoWhich one is more likely to be around in 10 years?
- deelowe 9y agoGeneral acceptance is inherent to the definition of currency. Unless we're going to move back to a pure barter system, all forms of currency are created out of "thin air" as the very definition of value is wholly dependent on perception. The more universally shared the perception of value is, the stronger the currency.
- colejohnson66 9y agoI think OP was referencing how US currency is fiat
- rtpg 9y agoRight, the source isn't important. What matters is whether what you've received is, for practical purposes, actually currency. If your boss showed up and said "from today we're going to pay you in bananas, and our exchange rate is $1000 per banana. By the way here's a raise too" and drops a bundle of bananas on your desk... Would you consider yourself paid? Bananas aren't even fiat! You gotta grow them first This is a silly example, since in the article there's clearly consent on both sides of the equation. But if the coins remain as "e-points" in their system and there's not much incentive on the buy side, they're not super useful as currency. In practice the crypto currency markets seem to fuel a good amount of liquidity. This is a pretty neat side effect of the block chain boom.
- IMTDb 9y ago> our exchange rate is $1000 per banana This implies that your boss is ready to trade both ways. I'd gladly accept the bundle of bananas.
- deelowe 9y ago> This implies that your boss is ready to trade both ways. Again, this is the definition of currency. The root comes from Latin and means to "flow" or "run." It's this condition of "flowing" that defines currency. As I said before, this shared perspective of how well a currency "flows" is what defines it's value. Fiat or otherwise doesn't matter. In the strawman presented here, you (and maybe the rest of the company) accept and will participate in the exchange rate, so bananas have become a slightly stronger currency. For most of the world, it's still pretty terrible, but they are marginally better because at least some people accept it as currency. Unless we plan to go back to bartering, this same logic applies for all forms of currency. There's nothing special about gold, bitcoins, rectangular plastic cards, or green sheets of paper with dead people's faces printed on them. What gives these things value is simply society's willingness to use these as a means of conducting transactions.
- TylerE 9y agoI would _mostly_ agree, but gold is actually a bad example as it has quite a bit on intrinsic value due to it's interesting metallurgical and electrical properties.
- celim307 9y agoExcept government money has nuclear aircraft carriers ensuring it's value. But yeah same exact thing!
- megy 9y agoHa, ok then. I will happily swap my mega coins for your crappy government currency.