> Which is why USD backed up by the worlds strongest economy are used for vastly more international transactions than all cripto coins combined.
In what sense do you believe USD to be 'backed' by the US economy?
In what sense do you believe USD to be 'backed' by the US economy?
Indirectly, messing with your currency risks economic harm creating a huge incentive for governments not to do that while things are going well.
That is absolutely correct. But nowhere does it demand that you conduct these transactions in USD. USD ends up getting used because it's convenient, which is because people have to pay their tax debts at the end of the year. However, that is a problem that can be trivially solved by software now, especially as society becomes more and more cashless.
As long as the US government accepts payment for taxes in USD, there will always be some demand for it. However, there is nothing actually stopping people from using other currencies for their normal transactions, which would substantially decrease demand for USD, and thereby reduce its value.
There is no sense in which the US government 'backs' dollars, except insofar as they are incentivized not to do anything to actively destroy them.
So, if by ‘some’ you mean multiple trillions of dollars of demand every year then ok. But, that’s rather trivializes what a trillion dollars means.
Which is why I am saying the economy backs the USD not the government.
True, though that's simple enough to hedge.
> So, if by ‘some’ you mean multiple trillions of dollars of demand every year then ok. But, that’s rather trivializes what a trillion dollars means.
Absolute numbers don't matter, relative ones do. The demand may go to trillions, but that would be down from tens of trillions.
Even record setting sustained inflation of say 2% per month in the middle of some horrific economic issues would still be a bastion of stability relative to many currency’s throughout history. So, as long as the economy stays steady and the USG does not do something monumentally stupid the US economy really does back the USD.
But nowhere does it demand that you conduct these
transactions in USD.
USD ends up getting used because it's
convenient
Why would anyone bother taking their money, going through all the steps to convert it into the foreign currency or software tokens that they need to buy from someone else (who's siphoning wealth from you) just to find out merchants don't even accept it due to the volatility. And what happens when the merchant turns out to be a fraud? No customer protection by design.
[1] https://steamcommunity.com/games/593110/announcements/detail...
I'm arguing that USD is not backed by the USG in any meaningful sense. Not that Bitcoin is a good alternative. Just that the "Bitcoin isn't backed by anything, but USD is" argument is unsound.
> Why would anyone bother taking their money, going through all the steps to convert it into the foreign currency or software tokens that they need to buy from someone else (who's siphoning wealth from you) just to find out merchants don't even accept it due to the volatility. And what happens when the merchant turns out to be a fraud? No customer protection by design.
Are you arguing that volatility is an inherent property of cryptocurrencies? Because if you're not, then I don't see why your point here is relevant. If you are, then i'd like to hear that argument spelled out.