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Yes, storing value is useful, but not storing value doesn't make a currency useless. You can always store value in other ways, by purchasing assets - such as fo
by dTal 7y ago
Yes, storing value is useful, but not storing value doesn't make a currency useless. You can always store value in other ways, by purchasing assets - such as food, or another currency.
It's worth noting that people tend to like to do this anyway, even when the currency is already pretty stable - because a house you can rap your knuckles against feels like a more secure store of value than numbers in a bank.
- papln 7y agoMoney is designed (by central banks) to depreciate at 2%/yr. Most erstwhile "durable" goods depreciate at a faster rate. Your house certainly does. Heck, taxes and insurance alone are almost 2%, before you even look at physical depreciation, which is generally estimated to be at least 1%/yr. (Speculative assets like the land it sits on might appreciate far more to compensate, however.)
- shadowgovt 7y agoI wouldn't say "useless" (it's clearly usable as an agreement between two parties that some amount of value was exchanged). But it's less useful than a currency where the observed exchange of value between two parties implies that most other parties agree value was exchanged. If you give me 2 BTC today but tomorrow the value of BTC has fallen by 90%, it's almost as if we never exchanged value in the first place. It's certainly not as helpful to me as if you give me $18,500 dollars today and I can spend them tomorrow. Failure of a currency to act as a store of value damages its utility as a means of exchange, because the amount of value exchanged is imprecise over time.