As the AI market continues to balloon, experts are warning that its VC-driven rise is eerily similar to that of the dot com bubble.
As the AI market continues to balloon, experts are warning that its VC-driven rise is eerily similar to that of the dot com bubble.
You are right in that it increases people’s belief in money because it is the primary source of revenue for states. But if the majority of people did not believe in the piece of paper, it would be worth nothing. That is the fundamental value of money as we know it.
There have been states where stones were the currency simply because the inhabitants believed in them.
Gold Standard
Linking money to a material with intrinsic value for it’s value
Gold has intrinsic value
US Dollar moved to be a Fiat Currency
US Dollar is backed by a Government
Crypto has zero intrinsic value, not linked to anything with intrinsic value, and not backed by a Government
Crypto is an imaginary “item” some people want to have valve. Value is created because of this want.
US Dollar is legal tinder for all US debts, Crypto is not
Crypto is not a currency but a digital commodity
Gold does not have intrinsic value. It is merely scarce (relatively speaking). The value of gold fluctuates all the time.
Intrinsic - belonging naturally; essential
Gold has physical applications that are needed
Even if people didn’t want it because of the looks, gold would still be needed to make things
Gold has intrinsic value because it is always going to be worth something
Gold is never going to be worthless. That’s it intrinsic value.
Much of gold’s value (certainly before the ending of the Gold Standard) was totally subjective. It looks pretty. Being rare and pretty gave it value.
I suppose you could tie some sort of value to technical application, but it isn’t intrinsic to gold itself. If society collapses tomorrow, gold isn’t suddenly going to be currency.
Yes much of gold’s value comes from the way it looks. Not disputing that.
It is
Gold has properties that are unique. You can’t just use iron as a replacement. Apple can’t be like, “You know gold is expensive, I think we will just use cheap iron in our phones instead”. Not going to work out. There is a demand for gold over it just looking pretty.
This technical application is what gives gold it’s intrinsic value
Even if that value is really low it’s always going to be something
Well not always because, like you said, if society collapsed, Apple wouldn’t need to make phones. But at that point, all economic stuff is out the window. It would have to go through a bartering system until some kind of currency system could get started again. Eventually gold will be needed again. So really it still has value just not at the time.
I recall hearing it was illegal to burn money 😉
Money is a physical representation of the concept of value. Saying “what gives money value” is like asking “why does rain make clouds.”
This is why printing money decreases the value of the currency - the value it represents has not changed so the value is diluted across the currency as the amount of currency expands.