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Don't forget that whole pesky "have to pay taxes to the state in their chosen currency under threat of the state monopoly on violence" thing. It is somewhat to
by rjbwork 5y ago
Don't forget that whole pesky "have to pay taxes to the state in their chosen currency under threat of the state monopoly on violence" thing. It is somewhat touched on in your first sentence, but at the end of the day, if you want to engage in productive economic activity in a particular jurisdiction, you must render what is Caesar's unto Caesar - and Caesar demands his preferred fiat.
- md_ 5y agoKnown as https://en.wikipedia.org/wiki/Chartalism https://en.wikipedia.org/wiki/Chartalism, by the way. :) While these risks clearly _do_ apply to traditional currencies, I do think, as an investor, it's worth considering market cap (as a proxy for "social belief in") and history of stability. Bitcoin's market cap is probably (factoring in permanently lost coins) something like $750B, which makes it a bit smaller than, say, the Swiss franc, and its history of stability is much, much shorter.
- rjbwork 5y agoChartalism is more of an absolute. I don't claim that money has value only due to this reason, just that it is a significant component of the mass delusion.
- md_ 5y agoAgreed, chartalism as the only explanation for assigned value is clearly empirically false. But as one mechanism, or perhaps one of the stable or reliable mechanisms, is somewhat convincing to me.
- donatj 5y agoIs there a term for something between Metallism and Chartalism for the value of currency coming neither from innate value nor state backing, but rather our belief in it? That's where I land I guess. Magicism?
- bwb 5y agoTaxes are good, they pay for civilization and the platform we all operate within :) I know people hate hearing that, but it is the truth. I am frustrated with how high they are on some things, bad spending, etc. But at the end of the day look around at what we have built as a civilization. That is from the collective pooling of money to build the entire system.
- rjbwork 5y agoI tend to agree. I sometimes fantasize that it were otherwise, but I don't think it's really possible to maintain a society of any size or sophistication without a state to do a lot of the fundamental things that keep things moving.
- lousyd 5y agoPerhaps there are people who don't want the civilisation and platform we operate in to be paid for.
- donatj 5y agoI feel like you're undervaluing the role individuals and private enterprise have on civilization. If there were just a bunch of roads and power lines without homes and businesses it wouldn't be much of a civilization.
- bwb 5y agoI value individuals and capitalism a great deal. But without civilization and a platform that shapes their energy they are just more ants in the ant farm. The platform is what gives them the ability to change the world. That is built in a symbiotic relationship but it seems like we forget the taxes/civilization part and worship individuals to often.
- kergonath 5y agoNot only taxes. In a lot of countries private businesses are required to accept the local official currency as well.
- usrusr 5y agoAt first glance ransomware might seem like a perfectly sufficient reimplemention of the taxes/violence thing. But that breaks down completely when you realize how willingly that particular Caesar would be taking whatever form of payment offered. I suppose it fully reverts to the theoretical grounding on taxes/violence of fiat once that ecosystem of shell consultancies set up for embargos and tax deductability comes into play.