5 ms·

This is literally how fiat currency works. Sure a government can pass a law saying so and so is the official currency but as you see in many minor countries the

This is literally how fiat currency works. Sure a government can pass a law saying so and so is the official currency but as you see in many minor countries they still use USD or Euros. Without buy in from the population fiat currency can also be left ignored. The value of USD is also a pyramid scheme and entirely depends on demand from everyone to keep it's value. The federal reserve is only one small actor creating demand.

CorrectHorseBat 5y ago
The value of USD depends on trust in the US government and economy, that is not a pyramid scheme.
- 0x0nyandesu 5y ago
  It is until it isn't. The base demand for USD comes from the federal reserve. Bitcoin has a similar base for it's legit uses (like international currency transfer) so both have a demand floor. After that it's all dependent on use and further down market demand. I think when we all are dead future generations will see crypto as a basic value store like gold. No one will call it a pyramid scheme either cause it would have been around since before they were born.
  - sokoloff 5y ago
    I always internalized the base demand for USD as being the only accepted currency to pay your US income taxes in.
  - CorrectHorseBat 5y ago
    Yes, and some currencies do lose value because the government and economies backing them have lost trust. The demand for USD comes from people wanting to do business with one of the biggest economies in the world. The demand for Bitcoin comes from people wanting to make money by hoarding Bitcoins. It could be different, but right now it is not and I'm not sure if Bitcoin (or any other cryptocoin) would survive a transition to become a currency or something else less like a pyramid scheme.
    - 0x0nyandesu 5y ago
      You're kinda dismissing it without respecting that it's no different from gold as far as people wanting to hoard it. People also do use Bitcoin when convenient to move money. I personally used it to pay someone in Brazil for some mechanical keyboard services when PayPal failed to transfer the money. Totally legal and organic demand exists.
      - CorrectHorseBat 5y ago
        Have you compared the gold price with the Bitcoin price? I'm not saying it Bitcoin could not be like gold, I'm saying right now it is not and everyone in it doesn't want it to be. And I'm not convinced it ever will be.
        0x0nyandesu 5y ago
        I'm thinking in the long long term of hundreds of years. Seems to me when we start exploring space moving around heavy chunks of metal won't be so useful anymore and we'll need to use a Blockchain to verify value transfer.
        ben_w 5y ago
        While I agree we will probably want something different from the current status-quo when light-lag gets big enough to matter for normal daily financial interaction, one potential solution could be to go back to local banks holding money locally, just as things were here on Earth before ATMs and cheap telephony.
        CorrectHorseBat 5y ago
        We haven't been using heavy chunks of metal as currency for a while without a need for blockchains. I see mostly disadvantages compared to government backed currencies.
- vkou 5y ago
  Yes and No. To someone who doesn't live in the US, the value of USD mostly depends on trust in the US government and economy. To someone who does, the value of USD mostly depends on whether or not the IRS will be asking for their due next April, whether or not their landlord/bank will be expecting a rent/mortgage payment next month, and whether or not the grocery is stocked with toilet paper. It is true that if any of those three things don't happen, you have far more serious problems than 'what currency you use'.
  - CorrectHorseBat 5y ago
    >To someone who does, the value of USD mostly depends on whether or not the IRS will be asking for their due next April, whether or not their landlord/bank will be expecting a rent/mortgage payment next month, and whether or not the grocery is stocked with toilet paper. Or in other words: trust in the US government and economy.
pydry 5y ago
The value of USD is underpinned via demand manufactured through taxes. Crypto has no equivalent of taxes so it is almost entirely reliant upon perception. This is partly why HODLers are so aggressive in defending the perception. It's possible to literally "talk" their wealth into worthlessness. There are countries that use USD but with the exception of ecuador (where you pay taxes in USD) i cant think of one that uses it exclusively.
- 0x0nyandesu 5y ago
  You're comparing a single country market to the entire world market. They are inherently different.
  - pydry 5y ago
    I am? I don't really see how.
    - 0x0nyandesu 5y ago
      US taxes (as base demand) are only paid by those interacting in the US market. Bitcoin base demand is international. Anyway they are totally different assets with their own trajectories and influences. We don't know what will happen in the future. What I do know is Bitcoin is deflationary while USD is inflationary by their nature.
      - pydry 5y ago
        >US taxes (as base demand) are only paid by those interacting in the US market. Bitcoin base demand is international. This is nonsensical. More USD is traded internationally than bitcoin. The value of USD for somebody living in Paraguay stems from a demand for US goods and services A) supplied by people who pay US taxes or B) supplied by client states of the US (e.g. saudi oil) who kind of also pay USD taxes in a roundabout way
        0x0nyandesu 5y ago

CorrectHorseBat 5y ago

The value of USD depends on trust in the US government and economy, that is not a pyramid scheme.

0x0nyandesu 5y ago
It is until it isn't. The base demand for USD comes from the federal reserve. Bitcoin has a similar base for it's legit uses (like international currency transfer) so both have a demand floor. After that it's all dependent on use and further down market demand. I think when we all are dead future generations will see crypto as a basic value store like gold. No one will call it a pyramid scheme either cause it would have been around since before they were born.
- sokoloff 5y ago
  I always internalized the base demand for USD as being the only accepted currency to pay your US income taxes in.
- CorrectHorseBat 5y ago
  Yes, and some currencies do lose value because the government and economies backing them have lost trust. The demand for USD comes from people wanting to do business with one of the biggest economies in the world. The demand for Bitcoin comes from people wanting to make money by hoarding Bitcoins. It could be different, but right now it is not and I'm not sure if Bitcoin (or any other cryptocoin) would survive a transition to become a currency or something else less like a pyramid scheme.
  - 0x0nyandesu 5y ago
    You're kinda dismissing it without respecting that it's no different from gold as far as people wanting to hoard it. People also do use Bitcoin when convenient to move money. I personally used it to pay someone in Brazil for some mechanical keyboard services when PayPal failed to transfer the money. Totally legal and organic demand exists.
    - CorrectHorseBat 5y ago
      Have you compared the gold price with the Bitcoin price? I'm not saying it Bitcoin could not be like gold, I'm saying right now it is not and everyone in it doesn't want it to be. And I'm not convinced it ever will be.
      - 0x0nyandesu 5y ago
        I'm thinking in the long long term of hundreds of years. Seems to me when we start exploring space moving around heavy chunks of metal won't be so useful anymore and we'll need to use a Blockchain to verify value transfer.
        ben_w 5y ago
        While I agree we will probably want something different from the current status-quo when light-lag gets big enough to matter for normal daily financial interaction, one potential solution could be to go back to local banks holding money locally, just as things were here on Earth before ATMs and cheap telephony.
        CorrectHorseBat 5y ago
        We haven't been using heavy chunks of metal as currency for a while without a need for blockchains. I see mostly disadvantages compared to government backed currencies.
vkou 5y ago
Yes and No. To someone who doesn't live in the US, the value of USD mostly depends on trust in the US government and economy. To someone who does, the value of USD mostly depends on whether or not the IRS will be asking for their due next April, whether or not their landlord/bank will be expecting a rent/mortgage payment next month, and whether or not the grocery is stocked with toilet paper. It is true that if any of those three things don't happen, you have far more serious problems than 'what currency you use'.
- CorrectHorseBat 5y ago
  >To someone who does, the value of USD mostly depends on whether or not the IRS will be asking for their due next April, whether or not their landlord/bank will be expecting a rent/mortgage payment next month, and whether or not the grocery is stocked with toilet paper. Or in other words: trust in the US government and economy.

pydry 5y ago

The value of USD is underpinned via demand manufactured through taxes. Crypto has no equivalent of taxes so it is almost entirely reliant upon perception. This is partly why HODLers are so aggressive in defending the perception. It's possible to literally "talk" their wealth into worthlessness. There are countries that use USD but with the exception of ecuador (where you pay taxes in USD) i cant think of one that uses it exclusively.

0x0nyandesu 5y ago
You're comparing a single country market to the entire world market. They are inherently different.
- pydry 5y ago
  I am? I don't really see how.
  - 0x0nyandesu 5y ago
    US taxes (as base demand) are only paid by those interacting in the US market. Bitcoin base demand is international. Anyway they are totally different assets with their own trajectories and influences. We don't know what will happen in the future. What I do know is Bitcoin is deflationary while USD is inflationary by their nature.
    - pydry 5y ago
      >US taxes (as base demand) are only paid by those interacting in the US market. Bitcoin base demand is international. This is nonsensical. More USD is traded internationally than bitcoin. The value of USD for somebody living in Paraguay stems from a demand for US goods and services A) supplied by people who pay US taxes or B) supplied by client states of the US (e.g. saudi oil) who kind of also pay USD taxes in a roundabout way
      - 0x0nyandesu 5y ago