Yes. When you look at the value of fiat currency, its value is fundamentally tied to a set of tangible assets. Specifically, it is tied to the value of the economy of the issuing authority. So when you have a dollar, you are tapping into a $23 trillion GDP and a country’s emergent value from factories, roads, residents, etc. This is similar to how a stock is slice of a company, with its worth determined by its individual assets being one entity.
Most cryptocurrencies are on much shakier ground. They frequently have no backing asset, with a valuation that is determined by mood. If demand collapses, the market will collapse.
In the end, there is a major question that needs to be answered: what is crypto for? If it’s for an investment, that makes it an outlier. Currencies are made to serve as an abstract, convenient store for value instead of trying to barter sacks of potatoes. They’re not for stuffing in a wallet forever. If on the other hand crypto can be used to make transactions more convenient, that would make more sense to me.
Yes. When you look at the value of fiat currency, its value is fundamentally tied to a set of tangible assets. Specifically, it is tied to the value of the economy of the issuing authority. So when you have a dollar, you are tapping into a $23 trillion GDP and a country’s emergent value from factories, roads, residents, etc. This is similar to how a stock is slice of a company, with its worth determined by its individual assets being one entity.
Most cryptocurrencies are on much shakier ground. They frequently have no backing asset, with a valuation that is determined by mood. If demand collapses, the market will collapse.
In the end, there is a major question that needs to be answered: what is crypto for? If it’s for an investment, that makes it an outlier. Currencies are made to serve as an abstract, convenient store for value instead of trying to barter sacks of potatoes. They’re not for stuffing in a wallet forever. If on the other hand crypto can be used to make transactions more convenient, that would make more sense to me.