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.
While the dollar is a fiat currency, it is backed by the US economy
In what was is the dollar backed by the US economy? It is backed by the faith in the say of the government. The US economy merely runs on the dollar, just as a car drives on roads.
its certainly more robust than some relatively new virtual currency.
It’s more established, for sure. But, the political situation has accelerated what was already happening: the world is de-dollarfying. Add on to that how the administration is alienating the rest of the world, that has accelerated the trend.
Bitcoin is solely backed by faith
True, but so is the value of dollar bills
with the added difficulty of you not being able to go down to a local bank and withdrawing it in cash
I dunno about you, but I don’t use cash that much myself.
if you need to and it’s incredibly volatile with it currently being worth 60% of what it was just three months ago.
It fluctuates, yes. But, so does gold. Same with fiat. The way fiat manifests its fluctuating value is through inflation and increased prices. I’m not saying bitcoin doesn’t fluctuate, but gold fluctuates too. The bet with gold or bitcoin is that the fiat system will consistently devalue itself (moreso with the isolationism the country is adopting and the lack of taxation on the rich), which will increase the value of BTC against the dollar.
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.
Its value (ad of today) is merely being the hedge. You’re right. Can’t go to Best Buy and buy a tv with BTC, same as with gold. But, for how long?
I dont think its a bad strategy to hold some as part of a diversified strategy
Wasn’t saying otherwise.
but putting all your wealth into it (or gold, or any other single thing) would be incredibly risky.
Didn’t say I did. But, I have enough in BTC to restart in another country when my home stops holding free and fair elections, and to serve as an effective hedge against inflation and the crumbling of the Empire.
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.
In what was is the dollar backed by the US economy? It is backed by the faith in the say of the government. The US economy merely runs on the dollar, just as a car drives on roads.
It’s more established, for sure. But, the political situation has accelerated what was already happening: the world is de-dollarfying. Add on to that how the administration is alienating the rest of the world, that has accelerated the trend.
True, but so is the value of dollar bills
I dunno about you, but I don’t use cash that much myself.
It fluctuates, yes. But, so does gold. Same with fiat. The way fiat manifests its fluctuating value is through inflation and increased prices. I’m not saying bitcoin doesn’t fluctuate, but gold fluctuates too. The bet with gold or bitcoin is that the fiat system will consistently devalue itself (moreso with the isolationism the country is adopting and the lack of taxation on the rich), which will increase the value of BTC against the dollar.
Its value (ad of today) is merely being the hedge. You’re right. Can’t go to Best Buy and buy a tv with BTC, same as with gold. But, for how long?
Wasn’t saying otherwise.
Didn’t say I did. But, I have enough in BTC to restart in another country when my home stops holding free and fair elections, and to serve as an effective hedge against inflation and the crumbling of the Empire.