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Bitcoin has not taught us that money can be produced and managed by "the free market." Bitcoin would be worthless if it could not be exchanged for fiat currenc

• gyom 14y ago
  They're not worthless if you can purchase real stuff with it instead of converting back into fiat currencies. The same can be said of every fiat currency : they're useless unless you can get real stuff (or services) for it at the end of the day.
  • betterunix 14y ago
    Except that fiat currencies are useful for paying your taxes, which is how governments back them. Tax laws, debt laws, torts, fees, and all of the other ways governments collect money from their citizens are what give fiat currencies utility. Even if a business only dealt in Bitcoin money it would still need to exchange at least some of its earnings for fiat currency if it had any intention of following the law. That is why Bitcoin exchanges matter: even if a business did transactions with both Bitcoin and fiat currency, there would be times when that business did not have enough fiat currency and would have to exchange its Bitcoin money to survive. There is a reason that everyone talks about the value of Bitcoin relative to other currencies, and it is that people must use other currencies to conduct some of their business. On the other hand, fiat currencies do not require foreign exchange to be valuable. It was very difficult to convert the Soviet Ruble to foreign currencies, but in the USSR the Soviet Ruble was money and had value.