Given there is no intrinsic worth of BTC, rather just the collectively belief it is worth something, these incentives are very strong with BTC.
Explain how this is any different from the US dollar? What is the intrinsic worth of USD?
The value of Crypto comes from the decentralization (no need for trusted third parties), and is proportional to the hashing power of the network. Upstarts can easily be 51%ed by an incumbent with a large mining infrastructure of the same kind... But this holds as long as people with destructive power let them run.
The primary difference is that people have to pay taxes and monthly payments on their debt. Every dollar created has to be returned one day. This ensures the continued existence of USD as a medium of exchange. Once something turns into a "store of value" it ceases to be a good medium of exchange.
The ability to eat something is not what makes it a store of value. Milk is a TERRIBLE store of value for time frames greater than a few weeks, for instance. The USD is a store of value as it is relatively stable and so you know that you'll be able to leverage its value in the future; gold does the same. The beauty of USD is that unless you think the United States of America is going to cease to be, it is the only thing accepted for tax payments and so a few hundred million people along with countless businesses and institutions are going to need USD to pay the government every year. Literally every stable currency is a "store of value"; the predictability of the value is what makes it stable. This is precisely why BTC is not stable, nor a good store of value. It is an asset whose primarily uses are speculation and illicit financial flows.
> Once something turns into a "store of value" it ceases to be a good medium of exchange.
I fail to see the connection. Sure, not all stores of value are good mediums of exchange, but this has more to do with the physical properties of the underlying commodity rather than the fact that it holds its value stably. Gold is too heavy to carry around in your pocket, and securely storing a lot of it requires specific infrastructure that most people don't want to maintain. These things are true regardless of whether or not the value of gold is relatively stable over time.
Since dropping gold standard, I've always seen it as faith in the US economy. There's no similar entity backing BTC.
all forms of money are worth something because people collectively agree that they are worth something and trade them for goods.
the USD is not special. BTC is not special.
People getting on their high horse about the USD and the faith in the US economy seem to forget that all things have a lifecycle and eventually everything goes away / is replaced. There is immense immediate pressure to keep the USD valuable and the thing that is used for international trade, but my guess is given 20-30 years a lot of things can happen.
If Bitcoin has no intrinsic value, how is that different than fiat? What gives the USD or British pound intrinsic value?
To the extent that any goods and services are for sale with prices in BTC, they are (in my experience) priced consistently with trading out of BTC into some currency (say USD) and then purchasing the product with proceeds of the sale.
The relevance of USD, and any currency, is a regional value.
And bitcoin is actually widely accepted here in Switzerland
Meanwhile BTC currently only serves as an abstraction over fiat currencies. It's practically only exchanged from and to fiat currencies, and that's not stable, as popularity is then the only mechanism dictating the price. BTC is much more like gold this way than the dollar.
I agree, which means both fiat currencies and Bitcoin have no intrinsic value, only what we collectively believe.
> BTC is more like gold this way than the dollar
agree
In 1933 $20USD would buy you 1oz of Gold. In 2021 it would take $2000USD to buy the same oz of gold.
It seems that the world’s reserve currency leaks approximately 99% of its value per century through the process of debasement which leads to inflation.
I would argue the world deserves a better store of value.
I am so confused by this argument.
I think you are right though that Bitcoin isn't acting like a currency, it is acting like an asset. Although it is highly speculative, more so that gold, as evidenced by its wild swings.
Bitcoin is a crypto-asset, not a crypto-currency.
I challenge the assumption that a currency is naturally inflationary in nature. Though it is very tempting to politicians to print money and debase the currency if they can get away with it, there is no inherent law of currencies that makes them inflationary. In fact, throughout hostory the only way fiat currencies could be inflated was through debasement. Bitcoin has a fixed supply and cannot be debased but those properties do not make it less of a currency.
> explains how this is very different
>> Launches a completely unrelated complaint about inflation which seems to serve mostly to highlight that BTC compares poorly to gold; the original answer is unacknowledged
It is held by other countries to pay their international debts, or to manipulate the exchange rate of their local currency.