Digital currencies are fundamentally changing the way we think about money and banking. The rapid rise of cryptocurrencies like Bitcoin, along with the
The answer to volatility is obviously just to offer products and services in a crypto currency and then there’s no more fluctuations. If I offer a pack of AA batteries for 0.1 Monero, then it doesn’t matter what the US dollar price of Monero does because as long as you have 0.1 Monero and want a pack of batteries, you can buy one. The more merchants do this, the more stable that given cryptocurrency will become. If another merchant comes in and offers that same pack of batteries for 0.09 Monero, either the first merchant must lower their prices or must justify their higher prices with a better quality product, etc.
The US Dollar is a fiat currency. The value is merely what the market dictates amongst trading frequency and how much debt is held in it.
It’s backed by nothing. A dollar has a made up value. In the1970s Nixon ended the US gold Standard, and those with property, not the government who held the gold, got to dictate it. Same thing through today.
The US dollar is backed up by you have to pay your taxes in US dollar so the US economy is going to accept US dollar, thus, if you have dollars, you can buy shit in the US. In effect, thus, the US dollar is backed by the US economy.
There’s no such mechanism for crypto coins. If you now say “well the Fed can just print money”, that’s US policy. The Euro works differently, there price stability reigns supreme, in any case the policies of both Fed and ECB are well-known and people trust that they don’t change willy-nilly because neither the US nor the EU has any interest in the fallout that would cause. That trust is in no way weaker, less of a guarantee, wrt. giving a hint at the future value of the currency as the collective faith that props up crypto coins as a unit of account.
And gold, btw, is practically useless as a commodity. Jewelry? Literally only used for that because it’s expensive. Technical applications? Do exist, but the amount needed is negligible. The value of gold relies on the existence of a luxury market.
National currencies are backed by the fear of people who have given themselves arbitrary titles that they agree allows them to point guns at you without being prosecuted for that.
While you have a point, paper sacks would be a bad currency because it’s decently easy to create more paper sacks and therefore inflation would run rampant quite quickly. This is why things that used to be considered money are no longer money such as seashells, glass beads, etc. It turns out they were too easy to make and inflation ran rampant until they found a harder currency.
I love when someone comes along and thinks they have the answer to all life’s problems, as if nobody else ever thought of their idea after thousands of years of economic theory. The hubris is intense here.
Paper sacks have a natural limit to being made just like everything else. Eventually you reach market stability, paper sacks are also not durable, so there would be some churn in the supply.
Those things were used either because they had inherent value (gold, seashells, gems) or they were just hard enough to make for the average person (glass beads, coinage).
The answer to volatility is obviously just to offer products and services in a crypto currency and then there’s no more fluctuations. If I offer a pack of AA batteries for 0.1 Monero, then it doesn’t matter what the US dollar price of Monero does because as long as you have 0.1 Monero and want a pack of batteries, you can buy one. The more merchants do this, the more stable that given cryptocurrency will become. If another merchant comes in and offers that same pack of batteries for 0.09 Monero, either the first merchant must lower their prices or must justify their higher prices with a better quality product, etc.
Edit: Yes, I already do this. https://xmrbazaar.com/user/AuroraGeneralStore/
That’s how all currencies work. The value is whatever we believe the value is. You could make the currency paper sacks and that would still be true.
No, it’s not.
The US Dollar is a fiat currency. The value is merely what the market dictates amongst trading frequency and how much debt is held in it.
It’s backed by nothing. A dollar has a made up value. In the1970s Nixon ended the US gold Standard, and those with property, not the government who held the gold, got to dictate it. Same thing through today.
Yeah, that was kind of my point. Currency only has the value people decide it has. It’s based on psychology, as all economics is.
The US dollar is backed up by you have to pay your taxes in US dollar so the US economy is going to accept US dollar, thus, if you have dollars, you can buy shit in the US. In effect, thus, the US dollar is backed by the US economy.
There’s no such mechanism for crypto coins. If you now say “well the Fed can just print money”, that’s US policy. The Euro works differently, there price stability reigns supreme, in any case the policies of both Fed and ECB are well-known and people trust that they don’t change willy-nilly because neither the US nor the EU has any interest in the fallout that would cause. That trust is in no way weaker, less of a guarantee, wrt. giving a hint at the future value of the currency as the collective faith that props up crypto coins as a unit of account.
And gold, btw, is practically useless as a commodity. Jewelry? Literally only used for that because it’s expensive. Technical applications? Do exist, but the amount needed is negligible. The value of gold relies on the existence of a luxury market.
National currencies are backed by people’s vested interest in the continued stability of the nation.
National currencies are backed by the fear of people who have given themselves arbitrary titles that they agree allows them to point guns at you without being prosecuted for that.
That’s a tremendously reductive perspective on what a nation is.
While you have a point, paper sacks would be a bad currency because it’s decently easy to create more paper sacks and therefore inflation would run rampant quite quickly. This is why things that used to be considered money are no longer money such as seashells, glass beads, etc. It turns out they were too easy to make and inflation ran rampant until they found a harder currency.
I love when someone comes along and thinks they have the answer to all life’s problems, as if nobody else ever thought of their idea after thousands of years of economic theory. The hubris is intense here.
Paper sacks have a natural limit to being made just like everything else. Eventually you reach market stability, paper sacks are also not durable, so there would be some churn in the supply.
Well, you go ahead and use paper sacks as a currency. And let me know how that goes.
It would be like using any other commodity. Literally done every day in every major market.
Those things were used either because they had inherent value (gold, seashells, gems) or they were just hard enough to make for the average person (glass beads, coinage).