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Indeed. A thought experiment: say the US government created a USD-prime currency that floated freely from USD. You could still use the USD in private transactio
by paulgb 6y ago
Indeed. A thought experiment: say the US government created a USD-prime currency that floated freely from USD. You could still use the USD in private transactions, but the US government would only transact and tax in USD-prime. What would be the fate of the original USD?
My belief that it would go to zero. I’m curious whether “fiat is backed by nothing” proponents would disagree.
- nicky0 6y agoBoth fiat currency and Bitcoin are backed by the same thing: mass belief. An incredibly powerful thing.
- paulgb 6y agoYep, but my point is that one is mass belief that the US government will continue wanting USD, the other is a mass belief that other people will continue wanting BTC. Both could be right, both could be wrong, but they are not the same proposition.
- nicky0 6y agoDon't forget that the US gov itself is also propped up by mass belief. Its authority rests in the people. Now you might say "actually its authority rests on people with guns", but that's only to the extent that the people with the guns believe in the governments's authority to tell them who to point them at. Underneath all is belief and sentiment.