4 ms·

After world war II, people in Germany burn paper money in winter. Because, by that time, fiat money is cheaper than coal and wood. That's funny it seems that t

After world war II, people in Germany burn paper money in winter. Because, by that time, fiat money is cheaper than coal and wood. That's funny it seems that this economist thinks fiat money can't never be valueless. Well, look Cyprus, and look Ukraine now. I am not saying Bitcoin won't never be valueless, but apparently fiat money is not completely invulnerable.

XorNot 13y ago
You know how Bitcoin prices spiked after Cyprus had it's banking issues? You do realize that that happened, and could only happen, because a large number of people believed the Cypriot currency was in fact not likely to remain "valueless" seeing as how it was still the sovereign currency of Cyprus, and were willing to exchange at least Bitcoin to hold it. The examples you give, are not examples where just fiat money fails. They're examples of the entire architecture of a society falling apart (the government is being overthrown in the Ukraine, post WW1 Germany was in the midst of a massive recession). These are all situations where no currency retains a stable value since no currency allows you to eat, fuel vehicles or defend yourself. In those situations, Bitcoin is as valueless as anything else (more so, by virtue of being unusable without the internet).
- michaelt 13y ago
  These are all situations where no currency retains a stable value since no currency allows you to eat, fuel vehicles or defend yourself. Isn't this - the ability to swap it for things you want - really what gives value to all currencies, even gold-backed ones? Seems to me there's nothing stopping Bitcoin fulfilling that requirement.
- arethuza 13y ago
  "a large number of people believed the Cypriot currency was in fact not likely to remain "valueless" The currency in use in Cyprus is the Euro - the problem with Cyprus was their dodgy banks not the currency itself.
- zAy0LfpBZLC8mAC 13y ago
  Except there was no such thing as a sovereign currency of Cyprus as Cyprus is using the euro, but only balances in bank accounts in Cyprus were at risk, so people with euro bank accounts outside Cyprus selling bitcoins for euros were simply profiting from that risk asymmetry.

XorNot 13y ago

You know how Bitcoin prices spiked after Cyprus had it's banking issues? You do realize that that happened, and could only happen, because a large number of people believed the Cypriot currency was in fact not likely to remain "valueless" seeing as how it was still the sovereign currency of Cyprus, and were willing to exchange at least Bitcoin to hold it. The examples you give, are not examples where just fiat money fails. They're examples of the entire architecture of a society falling apart (the government is being overthrown in the Ukraine, post WW1 Germany was in the midst of a massive recession). These are all situations where no currency retains a stable value since no currency allows you to eat, fuel vehicles or defend yourself. In those situations, Bitcoin is as valueless as anything else (more so, by virtue of being unusable without the internet).

michaelt 13y ago
These are all situations where no currency retains a stable value since no currency allows you to eat, fuel vehicles or defend yourself. Isn't this - the ability to swap it for things you want - really what gives value to all currencies, even gold-backed ones? Seems to me there's nothing stopping Bitcoin fulfilling that requirement.
arethuza 13y ago
"a large number of people believed the Cypriot currency was in fact not likely to remain "valueless" The currency in use in Cyprus is the Euro - the problem with Cyprus was their dodgy banks not the currency itself.
zAy0LfpBZLC8mAC 13y ago
Except there was no such thing as a sovereign currency of Cyprus as Cyprus is using the euro, but only balances in bank accounts in Cyprus were at risk, so people with euro bank accounts outside Cyprus selling bitcoins for euros were simply profiting from that risk asymmetry.