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> Speculative asset class fails as non-speculative legal tender class. This. Bitcoin proponents often claim that eventually everyone will use Bitcoin for payme
by codethief 2y ago
> Speculative asset class fails as non-speculative legal tender class.
This. Bitcoin proponents often claim that eventually everyone will use Bitcoin for payments ("Finally no more governments or central banks!") and that's why it will increase in value, so everyone should invest in BTC.
But this argument is fundamentally flawed: A currency, in order for it to work (in order for people to be able to trust it), needs to be stable in value. Which contradicts it being an investment vehicle and drastically varying in value over time.
- mikepurvis 2y agoAnd quite apart from that fundamental misalignment, sovereign states having some measure of control over their own monetary policy is arguably a pretty good thing.
- mindwok 2y agoAnd on top of that, consumers prefer institutions in the loop. That’s why people use Amex to pay for stuff, because if it goes wrong you’ve got a massive institution with a tonne of clout to help you out.
- varenc 2y agoThis is moot for El Salvador. They’ve been dollarized since 2001 and USD is effectively the only legal tender.
- mikepurvis 2y agoThat is helpful context— it's too bad TFA wasn't a bit more clear on the history. In any event, you could still make the case that prior to this bitcoin experiment, the people and economy of El Salvador still were benefiting from a human hand on the monetary tiller, it's just it was that of the US Fed rather than their own officials (elected or otherwise).
- roenxi 2y agoIn fairness, markets can operate quite well with almost nobody in them being able to argue why. Gold has remarkable staying power but it is rare to find gold proponents who can explain why convincingly. A lot of the arguments for where the value comes from are bunk. If I hear one more person explaining that jewellery matters I'll ... go peacefully about my day I suppose. Still holds its value though, the economy does not care if people understand why the price signals are so.
- ggm 2y agoDoing much shopping with gold coins lately? Even big things. Bought a car with a bar?
- codethief 2y agoI would argue that, in the case of gold (as well as many fiat currencies) the value is tightly coupled to the trust people put into the asset, and the other way around. "Gold has always been valuable and quite stable, so it won't lose all of its value over night." (and similarly for USD, EUR, …)
- iforgot22 2y agoThe argument is that it'll become more stable if it's adopted as a worldwide currency, kinda like gold.
- aydyn 2y agoWhat currency is stable in value? Certainly not the U.S. dollar.
- simpsond 2y agoNone, really. They are all floating relative to each other. But USD is stable enough to know what you can get with $10. Although the last few years have put that to the test.
- mystified5016 2y agoThe USD doesn't frequently lose all or nearly all value as we see from cryptocoins. My $10 today will be worth $10 tomorrow barring nuclear war or an apocalypse.
- FabHK 2y agoAnd anything beyond 3m you put into real estate, stocks, or bonds anyway. Real rates have mostly been positive; and if not, that's the result of an economy wide equilibrium process that can't be undone risklessly by some magic beans.
- aydyn 2y agoSure but the USD has two order of magnitude more total value, and probably more than that in day to day usage. So there's an implicit question there which apparently you and everyone else missed.
- acdha 2y agoWhy do you think the USD has so many orders of magnitude usage? Nobody missed the question, that was the point: for currencies, stability is what makes them useful. You don’t have an incentive to hoard dollars hoping they’ll go up in value, so you spend them and boost the economy. Other countries use dollars because they have the same benefit: I can write a contract with you saying what we’ll pay over the next year and be confident that neither of us is going to be widely inconvenienced by the kind of swings Bitcoin has. Remember that guy who spent 100BTC on a pizza? It’s a funny story but that’s why nobody uses Bitcoin for normal transactions.
- rcpt 2y agoIt makes sense when you realize that it's a religion
- elevaet 2y agoIt also needs to scale well, which bitcoin doesn't. This is evidenced by the ever increasing energy demand, slow transaction times and high fees.