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> if it’s a currency then converting every single coin to cash should result in no change to the conversion rate Is that how it works for currency? I would thi
by dkersten 5y ago
> if it’s a currency then converting every single coin to cash should result in no change to the conversion rate
Is that how it works for currency? I would think that if people tried to sell every single Euro for USD, the conversion rate would absolutely change.
- gomox 5y agoIt's not even remotely close to how it works for currency.
- ianai 5y agoI did try to find a metric for what I was referring to here. It seems to be a number not easily found out about bitcoin. The size of the daily forex trading was around $6.6 trillion in 2019 - see my original comment for comparison. Realistically, I was thinking of trading cash for cash of one nationality- which absolutely wouldn't change the face denominated. Kind of tautological and not as helpful. Probably testing whether bitcoin to usd acts similarly to another foreign currency to usd may be a useful metric. But why do people exchange international currencies? So some are just forex traders performing intraday arbitrage. But the real/biggest use of it is to exchange goods across national borders. That's a use which cannot exist with the cryptos in quite the same way. Even if a nation adopts a crypto like bitcoin as its currency it does not have the same function as a currency backed by that government since bitcoin is controlled by other people - see the nber article referenced here. Edit - my main point remains about the exchange elasticity of crypto to usd/a national currency. If the exchange rate changes rapidly with the number of crypto exchanged then it's not very liquid, by definition, and not storing value nor acting like a currency.