Understand the implications of Bitcoin's downfall in El Salvador. Learn about the failed economic bet and its impact on the country's financial stability.
I mean neither does FIAT currency, U.S. currency is based on taxes , there is nothing that backs it. Majority of GDP is just finance. We need more education on what and how a currency actually works.
The value of a unit of currency is based on someone else’s willingness to accept it. If you’re willing to accept two clam shells in exchange for one widget, then our clam shell currency has value between us.
Almost anyone in the world is (currently) willing to accept a US dollar. There will be some exchange rate and transaction fee, so maybe I demand three dollars instead of two. I know that I can convert those three US dollars into my local currency that others are willing to accept.
The whole premise of bitcoin is that the line will continue going up and someone will always be willing to pay more for it than what you paid. If you agree to sell your car for one bitcoin, and tomorrow it crashes, you just lost the entire value of your car. The chances of a sovereign currency crashing is never 0, but it’s much more stable than bitcoin.
I mean neither does FIAT currency, U.S. currency is based on taxes , there is nothing that backs it. Majority of GDP is just finance. We need more education on what and how a currency actually works.
The value of a unit of currency is based on someone else’s willingness to accept it. If you’re willing to accept two clam shells in exchange for one widget, then our clam shell currency has value between us.
Almost anyone in the world is (currently) willing to accept a US dollar. There will be some exchange rate and transaction fee, so maybe I demand three dollars instead of two. I know that I can convert those three US dollars into my local currency that others are willing to accept.
The whole premise of bitcoin is that the line will continue going up and someone will always be willing to pay more for it than what you paid. If you agree to sell your car for one bitcoin, and tomorrow it crashes, you just lost the entire value of your car. The chances of a sovereign currency crashing is never 0, but it’s much more stable than bitcoin.
Nothing backs US currency?
I’d argue the US military backs the US dollar.