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Bingo. A lot of people mistakenly conclude that Bitcoin's "fair value" must be 0 because it lacks an intrinsic value. But they fail to realize that fiat money a
by olalonde 4y ago
Bingo. A lot of people mistakenly conclude that Bitcoin's "fair value" must be 0 because it lacks an intrinsic value. But they fail to realize that fiat money also lacks an intrinsic value. Even gold to a large extent lacks an intrinsic value in the sense that its intrinsic value is a negligible fraction of its actual market value.
- arbitrage 4y agoYou're close. Fiat money has value when it's backed by something. The US$ is backed by the US government. It's still fiat money.
- olalonde 4y agoIt is "backed" as in endorsed, or supported, by the US government. In the same sense that Bitcoin is "backed" by its many worldwide supporters and miners. It is not "backed" in the traditional meaning of being redeemable for something else at a fixed rate ("backed by gold", "backed by silver", etc.).
- nradov 4y agoIntrinsic value (or fair value) is a meaningless concept when applied to currencies. The US dollar has value because the US government maintains a fairly effective monopoly on violence over a large chunk of real estate. They require residents to pay taxes in that currency, and if you don't pay then the government will seize your assets by force. Overall this system works pretty well.
- legulere 4y agoThe intrinsic value of fiat money is that I can pay my taxes with it and avoid persecution by the state.