4 ms·
Fiat money, by definition, has value because the government says so. It's backed by police military. Government can run the money printing machine whenever they
by miguelmota 6y ago
Fiat money, by definition, has value because the government says so. It's backed by police military. Government can run the money printing machine whenever they please. You can work hard all your life placing your savings in a bank account but the purchasing power will be a lot less in the future because of inflation. Bitcoin is fixed supply and Ethereum could even be deflationary in the future.
- billytetrud 6y agoAn actual monetarily deflationary currency would be just as bad as a monetarily inflating currency because it would distort the market just as much.
- Nevermark 6y agoGovernment legal and enforcement efforts to promote a currency are neither sufficient or necessary for a currency to have value. The value of a currency comes from its usefulness for transactions. Many ingredients come into play there, but the big one is wide acceptance. Government efforts are a (for good or ill) common coercive and often successful tactic to create the conditions of wide acceptance. But such efforts can fail and any other conditions that create wide acceptance are just as valid.