............

[Daz69]

........

[Spacebound]

Bit coins aren't exactly stable, I'd have more faith in currency backed by a reputable government.

[Daz69]

Bit coins aren't exactly stable, I'd have more faith in currency backed by a reputable government.

Which reputable government is that..?

[Spacebound]

 

Bit coins aren't exactly stable, I'd have more faith in currency backed by a reputable government.

Which reputable government is that..?

Something AAA rated like the aus currency.

 

[GyzzBrah]

History shows that paper currency, backed by nothing of value, will ultimately fail. It’s only a matter of time until no one will be accepting the dollar. By trading exclusively in cryptocurrencies, we’ll still be in business when that time comes.”

But isnt money just a thing based on value via scarcity right? So from what I read, bitcoins are pretty rare, like 1000 + nzd = 1 coin, so is the main reason they want cryptocurrency is bc its rare or for some other reason? Also, who made bitcoin, and who decides how much one unit is worth. Because its basically a 'bit' so that in itself is worth nothing, whereas isnt the dollar based on the value of gold a country owns? It's my 2nd year doing eco ooh so  many questions.

Edit: Also, why is gold valuable outside of its scarcity and technoligical uses?

[Kalidane]

History shows that paper currency, backed by nothing of value, will ultimately fail. It’s only a matter of time until no one will be accepting the dollar. By trading exclusively in cryptocurrencies, we’ll still be in business when that time comes.”

But isnt money just a thing based on value via scarcity right? So from what I read, bitcoins are pretty rare, like 1000 + nzd = 1 coin, so is the main reason they want cryptocurrency is bc its rare or for some other reason? Also, who made bitcoin, and who decides how much one unit is worth. Because its basically a 'bit' so that in itself is worth nothing, whereas isnt the dollar based on the value of gold a country owns? It's my 2nd year doing eco ooh so  many questions.

Edit: Also, why is gold valuable outside of its scarcity and technoligical uses?

 

 

It might be easier to think of the value of a currency in 'backwards' terms.  It is determined by what you can exchange it for.  So, X cigarettes or 1/N pies etc.  It would take hours to touch on what causes this value to change.  If an additional 5% supply of US Dollars came into existence today, it does not follow that the price of goods in US Dollar terms would increase by a similar amount to compensate.  It is far more complicated than that.  TBH econ text books are not going to be terribly useful (nor the typical econ degree).

 

BCs aren't rare.  They are mass produced in China/Eastern Europe/Russia.  It costs time, power and computing resources to 'find' BCs.  As you say, absolutely no inherent value.  The value is determined by where buyers and sellers are prepared to exchange BCs for another currency.  This can change a great deal in a short period of time.

 

No major currency is backed by gold so no the amount of gold the US govt owns is essentially irrelevant to the value of their currency.

 

Gold value is determined by the 'numismatic' element, industrial and jewellry applications, desirability as a store of wealth, and scarcity.  Approximately all gold dug up through the course of human history is still in circulation and we add a lot to it each year.  Being a commodity/currency hybrid, it's price is affected by US dollar value and interest rates, geopolitical risk level, inflation (current and anticipated), speculator behaviour (they tend to act in a pack-like manner causing trends), global liquidity, and risk appetite for the various asset classes.  Value does not equal price (ever, for anything).

 

[Cameron_R]

(There are now zero currencies that are still valued thru gold)

 

I would never trust a currency like BitCoin.

I know, never say never, but a currency that nobody in the world except about 5 software developers truely understand, with no real transparency (ie who really knows if the system isn't rigged!?), that could go off line any time with no warning, has no consumer protection or government backing is a currency to avoid.

If a country like Argentina can't control a real currency why would you trust an imaginary, electronic, built for drug dealers and gun runners currency?

[Wookie]

Dropping the gold standard was a huge mistake.

There is a clip somewhere, where the then head of the Federal Reserve (Krugman), was asked to explain what money was. Essentially he couldn't give an objective answer.

[Leeroid]

Gold standard was abandoned because the total amount of money in circulation is increasing at a faster pace (inflation) than new gold discoveries. Also the supply of gold is finite whereas currency is infinite.

With the future so uncertain, some people put their fortunes on Bitcoins, some people buy up commodities like gold and other people invest in the US dollar. Personally, I would be more at ease if I had gold in the case of a global crisis like a war or serious weather occurrence. It has been accepted as payment for most of history, in whatever country, irrevelant if governments collapse and not dependent on the Internet.

Bitcoins are good if you a drug dealer or deal in illegitimate trade. Very volatile and susceptible to hacking though. Think the NZ bitcoin server got hacked a week ago and a lot of Bitcoins were lost