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Comment by nightski | Hacker News Reader

People do not invest in USD because they expect a gain? Anyone holding cash is doing exactly this. Because the only rational reason to hold USD instead of spending it or converting it to some other asset/investment is because you think it's value is going to either hold or grow more than other options.

If people expected no gain in USD (or inflation) then they would not hold USD and instead choose assets or other investments.

If one does expect profits they can achieve that not just by BTC going up in value, but other currencies being inflated.

I myself hold bitcoin as a store of value and do not necessarily expect profits. I simply feel that it will hold it's value better than other things. I could be wrong, but that doesn't mean it is a Ponzi.

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No, people hold cash because they can get things done on short notice. Like if a storm blows over your fence, you can write a check and have it replaced. If you held stocks, bonds, or real estate, you’d have to sell that asset and withdraw cash to get your fence back up which is pretty unacceptable.

I hold cash knowing full well that I’m bleeding due to inflation, but the versatility is well worth it. That’s pretty much everyone who is holding cash other than a small handful of forex traders speculating on USD vs euros or whatever

A credit card or some other line of credit is the best form of liquidity, more widely accepted than cash (I can easily use it internationally or online).

The reason to hold cash is its low volatility. You can store it in a savings account and even with inflation potentially driving your return negative when risk adjusted it may beat other assets and you don't even have to speculate on forex!

Twice in my life I've had to hire a lawyer. One took wire transfers and the other took checks/money orders.

The vast majority of attorneys require the establishment of a retainer account (and in most jurisdictions it's one of the criteria to tell if the guy is officially 'your lawyer' or not yet)

And yet a lawyer is exactly one of those things where you say "oh shit I need one right now".

There's a reason the saying goes 'cash is king'

Good luck with your credit card

Nope, people do not hold USD because they expect a gain.

They are willing to pay the inflation penalty because holding the dollars in question provides them something. Generally that means either a sense of security or liquidity on short notice.

Holding dollars is paying a fee for liquidity.

Does it really make sense to hold USD if your only goal is liquidity? Maybe if you need it immediately, but honestly stocks and some other investments can usually be sold with the money accessible in seconds (or you can use credit). Really what I feel the value prop is for cash is low volatility (aka security as you mentioned).

With low inflation like we have seen in the past, risk adjusted it might be a better spot to hold that money relative to other investments. So yes, I hold a small portion of my portfolio in USD for that gain.

If it was not providing that low volatility (inflation spikes like crazy), then I'd be much less inclined to keep my money in USD outside of the minimum I'd need for immediate spending. Because returns are low. So the "gain" is in the risk adjusted return relative to other assets (which could ultimately be slightly negative).

I don't think you can sell traditional investments like stocks in seconds unless it is within designated trading hours. Crypto you can trade 24/7, although fiat wires out to traditional bank accounts still operate within certain hours (at least in the US, maybe this is different elsewhere). I still hold a small amount of my portfolio in USD, even considering inflation, but this is because it's less volatile than crypto, and I think holding actual cash is better than holding a stablecoin.

Stablecoins have counter-party risk. USDT is run by folks under investigation by the DOJ for bank fraud and was at various times not actually backed (sometimes by anything). And the scuttlebutt is USDC is currently under investigation by the SEC. [1]

[1] https://ca.finance.yahoo.com/news/public-filing-from-crypto-...

I agree. I intentionally don't hold stablecoins. As I mentioned I'd rather hold actual cash. One nice thing about stablecoins is they can be transferred around the world 24/7, and there are various high APRs for lending out stablecoins (not without risk, of course, there's nothing like FDIC insurance on those). Anyway, I'm surprised how much trust the crypto community puts in Tether.

This isn't correct. People hold cash for its liquidity. They generally expect USD to lose a small amount of its value over short periods of time, and that is the price one pays for keeping a portion of one's assets liquid.

The reason to hold USD is that it is one of the most accepted forms of payment around, and the cost/benefit of any other way to store wealth is likely to eat more than the slow rot of inflation.

No, people expect inflation of USD, devaluing held dollars.

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