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The USD is backed by the power to tax 330 million people. Bitcoin is not.

by khuey 5y ago

ethanbond 5y ago
And, ultimately, the power to invade the other few billion people who can’t be taxed
- sschueller 5y ago
  Switzerland's currency is quite strong and considered a safe heaven. Do you think Switzerland has the capability or would invade another country to collected tax from a few billion people?
  - jrochkind1 5y ago
    I am not an expert in how currencies work, but it's worth nothing that Switzerland, like most countries, keeps most of it's own reserves in USD (presumably treasury bills), and has around 1 trillion in USD in reserve. Which is not unrelated to the value of it's own currency and their ability to stabilize it. But I am not claiming to be able to explain the details myself. https://www.ceicdata.com/en/switzerland/official-reserve-assets/official-reserve-assets-usd https://www.ceicdata.com/en/switzerland/official-reserve-ass...
    - khuey 5y ago
      That number you're looking at is "total Swiss foreign currency reserves in units of USD" not "Swiss foreign currency reserves that are USD". Switzerland, for reasons that are fairly obvious, holds large Euro reserves. At the end of 2020 USD was only ~35% of that total amount.
      - jrochkind1 5y ago
        Good correction, thanks! Still 35% of reserves is plenty! I hadn't considered how many reserves have probably shifted to euros since the euro, that's actually a big deal for the US. Anyway...
samarama 5y ago
That has nothing to do with its value. It’s value is in how robust it’s value it is. It isn’t robust at all and has lost 30% or more of its value since the start of the pandemic if you look at commodities.
- immibis 5y ago
  So, in your eyes, value is proportional to the rate of change of value? I plugged it into Wolfram Alpha and it showed some solutions. Some go up to infinity and some go down to zero. So the first guy was right after all!
- senkora 5y ago
  Value is a function of supply and demand. Taxation is guaranteed demand, so it does affect value.
tartoran 5y ago
By that logic then the more populous a country is the stronger their currency should be. We don’t see that. It’s a bit more complicated than that..
- asimpletune 5y ago
  I mean, it's sort of like that though isn't it? Maybe not quite so literally, but, yes, you'd have to admit that the USD gets its strength from being able to take 330M Americans.
  - tartoran 5y ago
    Not really. Look at China, look at India. By this logic we should all rely on the strength of their currency

The USD is backed by the power to tax 330 million people. Bitcoin is not.

by khuey 5y ago

The USD is backed by the power to tax 330 million people. Bitcoin is not.

ethanbond 5y ago

And, ultimately, the power to invade the other few billion people who can’t be taxed

sschueller 5y ago
Switzerland's currency is quite strong and considered a safe heaven. Do you think Switzerland has the capability or would invade another country to collected tax from a few billion people?
- jrochkind1 5y ago
  I am not an expert in how currencies work, but it's worth nothing that Switzerland, like most countries, keeps most of it's own reserves in USD (presumably treasury bills), and has around 1 trillion in USD in reserve. Which is not unrelated to the value of it's own currency and their ability to stabilize it. But I am not claiming to be able to explain the details myself. https://www.ceicdata.com/en/switzerland/official-reserve-assets/official-reserve-assets-usd https://www.ceicdata.com/en/switzerland/official-reserve-ass...
  - khuey 5y ago
    That number you're looking at is "total Swiss foreign currency reserves in units of USD" not "Swiss foreign currency reserves that are USD". Switzerland, for reasons that are fairly obvious, holds large Euro reserves. At the end of 2020 USD was only ~35% of that total amount.
    - jrochkind1 5y ago
      Good correction, thanks! Still 35% of reserves is plenty! I hadn't considered how many reserves have probably shifted to euros since the euro, that's actually a big deal for the US. Anyway...

samarama 5y ago

That has nothing to do with its value. It’s value is in how robust it’s value it is. It isn’t robust at all and has lost 30% or more of its value since the start of the pandemic if you look at commodities.

immibis 5y ago
So, in your eyes, value is proportional to the rate of change of value? I plugged it into Wolfram Alpha and it showed some solutions. Some go up to infinity and some go down to zero. So the first guy was right after all!
senkora 5y ago
Value is a function of supply and demand. Taxation is guaranteed demand, so it does affect value.

tartoran 5y ago

By that logic then the more populous a country is the stronger their currency should be. We don’t see that. It’s a bit more complicated than that..

asimpletune 5y ago
I mean, it's sort of like that though isn't it? Maybe not quite so literally, but, yes, you'd have to admit that the USD gets its strength from being able to take 330M Americans.
- tartoran 5y ago
  Not really. Look at China, look at India. By this logic we should all rely on the strength of their currency