Another apt song:
But what a fool believes he sees
No wise man has the power to reason away
What seems to be
Is always better than nothing
There’s nothing at all
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US dollars are backed by a guarantee from the US government that you will be able to use US dollars to pay your taxes (and similar for the Euro in Europe, etc.). The USA are a big and important place with a fairly strong economy and are unlikely to go away suddenly, which means there is a constant demand for US dollars on the part of people and companies with taxes due in the US. In other words, you could do a lot worse than keeping US dollars around because even if you don’t personally need to pay taxes to Uncle Sam, you can likely get somebody who does to take them off your hands if necessary. You can’t use Bitcoin to pay your taxes unless you happen to live in El Salvador, and even then it’s probably not a great idea.
The “value” of cryptocurrencies like Bitcoin that you own depends entirely on what somebody else is prepared to pay you for them. They don’t earn you interest or dividends. If you can’t find anybody who is willing to buy them from you, their value is zero, and indeed the only way to profit from them at all is to sell them for more than you paid for them.
Also, there is no single central institution that determines a definitive, official “value” of, e.g., Bitcoin. If people say that 1 BTC is currently “worth”, say, $35,000, this only means that on some crypto exchange somebody has recently been seen buying or selling 1 BTC for $35,000, or more realistically the equivalent of $35,000 in a “stablecoin” like Tether because crypto exchanges avoid dealing with actual dollars as much as they possibly can. However, it turns out that most Bitcoin transactions are instances of “wash trading” or “painting the tape”, where Bitcoin holders sell Bitcoin to themselves in order to generate artificial trading volume and keep the “value” of the currency high – a practice that is illegal when done with stocks on the stock market but so far not in the world of cryptocurrencies. Even if 1 BTC is claimed to be “worth” $35,000, that doesn’t mean that it is straightforward to turn 1 BTC into 35,000 actual dollars from the Federal Reserve; whoever does the trade will have to comply with “know-your-customer” laws which are in place to curb money laundering (there goes the supposed anonymity of Bitcoin) and chances are that the tax office will become interested, too.
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Lots of naive, gullible people are sad because they lost money on a scam. A few smart, immoral, greedy people are happy because their scam netted money. The rest of us go about our business. Such is life.
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Read a pretty convincing argument that it’s actually a negative sum game, but I can’t remember the details. Either way, it’s for chumps.
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Yes.
You’ve just defined a fiat currency with bitcoin, and the whole concept of currency exchanges as a thing.
Currently the dollar is pegged solidly to the petrodollar, but for the most part other currencies are NOT tied to the US dollar, and fluctuate based on what people are willing to pay. This is the same with all the coins. There’s nothing backing any of this that has an intrinsic value.
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They still own most a large chunk of Ferrari, and we all know that Ferraris are made by Communists.
Don’t believe me? Look at the election results for Emilia-Romagna since 1945.
This also means that Lamborghinis and Maseratis are made by Communists too. Enjoy funding us, billionaires
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The German government, for example, gives value to the euro by requiring taxes to be paid in euros. This means that if you’re liable for taxes in Germany, you need euros or other commodities that are convertible to euros or you will be in trouble with the government, so euros are valuable. Since the German government sets the taxes arbitrarily based on the amount of money it needs to keep the country going (give or take), “what people are willing to pay” only plays an indirect role in this. (Even the Russian rouble is still valuable to people in Russia for this reason even though hardly anyone outside of Russia is interested in it these days.)
As long as no country – and certainly no significant country – requires taxes to be paid in Bitcoin (even in El Salvador you can still use USD, and most people do) the same mechanism doesn’t work for Bitcoin. Also Bitcoin really sucks as a currency in any case, for a variety of well-known reasons, and declaring that it “is” a currency doesn’t actually make it one.
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A game for suckers:
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El Salvador appears to be in quite a bit of trouble because of Bitcoin:
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But just look at this model of the golden city that they’re about to build!
(Maybe this is breaking Godwin’s law, but this really reminds me of a scene in the movie Downfall where Hitler is admiring a model showing the grand plans for a rebuilt Berlin, even as everything is going to hell around him.)
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FWIW, the there’s this ugly and utterly useless concrete cylinder, nothing more tangible came from the grand plan, a befitting memorial, I guess:
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As it happens, Terra Luna is plummeting bad.
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Not only can’t you give it a hand, but a third of its holders can’t hand it in for that bad ol’ fiat currency if they want to get out.
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According to David Gerard, the Terra/Luna thing is the reason for much of the recent Bitcoin crash.
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I admit to not fully understanding this staking business, but it sounds precisely like it’s designed to allow the lesser fools to exit the game early (and profitably) in a crash situation like this, while the greater fools are left holding the bag.
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I doubt a lot of them understood the consequences of staking, either. They just saw it as an easy way to make more of the cryptocurrency by demonstrating their faith in it.
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Good enough to partner with Peugeot to rebrand the parent company Stellaris. The Fiat 500e is a great little electric, I prefer it over any Tesla.
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