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Many crypto enthusiasts at some point argue that a) stocks and fiat currencies are shared social fictions, so b) what's the big difference between them and cryp
by YossarianFrPrez 4y ago
Many crypto enthusiasts at some point argue that a) stocks and fiat currencies are shared social fictions, so b) what's the big difference between them and crypto? There was a meme that went around a few years ago which said something to the effect of "Your parents don't understand crypto because they think money is real."
There is some truth to this argument. Stock prices can diverge wildly from fundamentals, and I can understand how people can look at various stocks and throw their hands up in the air.
At the same time, I think this argument misses the point somewhat. Which is that it is the shared part of "shared fiction" that matters. What convinces millions upon millions upon millions of people that dollars should be used is the fact that everyone else is also convinced; not that the exact price of, say, a chair, is somewhat arbitrary.
- __B_B__ 4y agoAll "shared fictions" are going to be supported by their affiliated versions of the four P's. Politicians, Police, Professors, Press.
- zer01 4y agoThe theory generally goes that what convinces people to use the USD is that it’s backed by the full faith (and more importantly, full military force) of the US government. The Breton Woods Agreement and after getting off the gold standard the “petro-dollar” solidified the USD as the reserve currency for nearly the past 100 years. The flip side is that unfortunately the stability of the USD is in the hands of politicians and other stewards of the country, which is an immense power to wield, and highly susceptible to corruption and misaligned incentives. The idea behind cryptocurrencies like Bitcoin is that the code and protocol are simply open source computer code. China can’t arbitrarily decide that they have more bitcoins than they actually have, even if they dedicate an enormous amount of power and influence to try to do so. It provides a tool by which people can transfer value even with hostile adversaries. There’s also a fixed supply that will ever exist, and while deflationary money clearly has issues when it’s the only currency used, as a counterbalance to politically-driven inflationary money it seems like a useful hedge, even more so than gold (we have estimations for how much gold exists but we can’t ever say with certainty - but you can search literally the entire galaxy for more bitcoins and you won’t find them).