The same way we value any other fiat currency. The value of fiat is faith of redeemability (that it will have value in further trade transactions). Fiat isn’t backed by anything else. So, if two countries (or businesses across boarders) want to conduct business, what is better?
Conducting it in the currency of a foreign state that does sanctions, constantly devalues its fiat currency, and votes for Republicans?
Or,
Conducting that business in a decentralized currency that isn’t backed by anything really other than its ability to be used in other trade and isn’t subject to the recklessness of a bipolar country?
The value of how many BTC international transaction is worth ultimately boils down to negotation. Same holds true for gold, in a way. You just can then just exchange the btc for local currency. The thing that imparts value of BTC to me is how portable it is. If I had to flee the United States, its easier to do with $20k usd (made up amount) in btc than it is to do with gold.
Also, to answer your question directly, how is it a hedge? Soverigns with fiat that bow to billionaires don’t want to have taxes raised. So, to make up for the deficit (the difference between what the budget calls for and what is taxed) is usually made up for by printing more made up dollars. This devalues the fiat.
Like, imagine this with gold. Imagine there can only ever be 21 million ounces of gold (no asteroid mining). The more that central banks print, the more the value if those 21 million ounces goes up since gold can serve as a transferable alternative.
While the dollar is a fiat currency, it is backed by the US economy and even with all of its shortcomings, its certainly more robust than some relatively new virtual currency. Bitcoin is solely backed by faith with the added difficulty of you not being able to go down to a local bank and withdrawing it in cash if you need to and it’s incredibly volatile with it currently being worth 60% of what it was just three months ago.
With regard to inflation, bitcoin isn’t immune from this either considering you have to tie it to a local currency to assign it a value so while it may be independent from a single nation’s inflation rate, you’ll still feel it when you cash some out to buy something.
I dont think its a bad strategy to hold some as part of a diversified strategy, but putting all your wealth into it (or gold, or any other single thing) would be incredibly risky.
How is it a secure hedge if its value isn’t tied to anything?
The same way we value any other fiat currency. The value of fiat is faith of redeemability (that it will have value in further trade transactions). Fiat isn’t backed by anything else. So, if two countries (or businesses across boarders) want to conduct business, what is better?
Conducting it in the currency of a foreign state that does sanctions, constantly devalues its fiat currency, and votes for Republicans?
Or,
Conducting that business in a decentralized currency that isn’t backed by anything really other than its ability to be used in other trade and isn’t subject to the recklessness of a bipolar country?
The value of how many BTC international transaction is worth ultimately boils down to negotation. Same holds true for gold, in a way. You just can then just exchange the btc for local currency. The thing that imparts value of BTC to me is how portable it is. If I had to flee the United States, its easier to do with $20k usd (made up amount) in btc than it is to do with gold.
Also, to answer your question directly, how is it a hedge? Soverigns with fiat that bow to billionaires don’t want to have taxes raised. So, to make up for the deficit (the difference between what the budget calls for and what is taxed) is usually made up for by printing more made up dollars. This devalues the fiat.
Like, imagine this with gold. Imagine there can only ever be 21 million ounces of gold (no asteroid mining). The more that central banks print, the more the value if those 21 million ounces goes up since gold can serve as a transferable alternative.
While the dollar is a fiat currency, it is backed by the US economy and even with all of its shortcomings, its certainly more robust than some relatively new virtual currency. Bitcoin is solely backed by faith with the added difficulty of you not being able to go down to a local bank and withdrawing it in cash if you need to and it’s incredibly volatile with it currently being worth 60% of what it was just three months ago.
With regard to inflation, bitcoin isn’t immune from this either considering you have to tie it to a local currency to assign it a value so while it may be independent from a single nation’s inflation rate, you’ll still feel it when you cash some out to buy something.
I dont think its a bad strategy to hold some as part of a diversified strategy, but putting all your wealth into it (or gold, or any other single thing) would be incredibly risky.