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Intrinsic value and market price are slightly different. I imagine the difference brings us back to the fact that bitcoin is unbacked by any government. There i
by ritchiea 14y ago
Intrinsic value and market price are slightly different. I imagine the difference brings us back to the fact that bitcoin is unbacked by any government. There is a worst case scenario that bitcoins are worthless. Government backed currencies despite not being tied to the standard of a physical good have a sovereign entity responsible for their value thus they are as valuable as your trust in that sovereign.
- stonemetal 14y agoWhat does it mean to trust in a sovereign in this case? If I take a $20 from my wallet down to the county court house, or any other government building you like, what should I trust to happen?
- ritchiea 14y agoActually when I used the word "trust" I was thinking of countries with their own currency that have unstable governments and/or economies. So imagine country X exists in South America and you have 20 country X dollars. A week ago one country X dollar was worth 2 US dollars. But today country X decided to introduce into circulation hundreds of trillions of dollars in new currency to deal with their massive debts and it completely devalues your 20 country X dollars. Or today there is a communist coup in country X and the new regime declares the old currency worthless. That's what I meant by "trust."