all 6 comments

[–]wizzwizz4 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (5 children)

What's the joke? Is it that the lower one is a modern note?

[–]JasonCarswell 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (4 children)

The middle note you can trade for silver.

You can't take the bottom one anywhere and get silver for it. It's backed by nothing except blind trust in the government and the private corporation know as the Federal Reserve (nothing federal about it).

The world is getting sick and tired of American wars and corruption. When they decide to lose faith in the American dollar there will be nothing backing it but a bunch of guns. No silver, no gold standard, and if/when they loose faith the petro-dollar will die while they move over to supporting the petro-euro or petro-yuan or something else, perhaps a crypto petrocoin.

Similarly, Bitcoin and other cryptos are based on trust too, backed by nothing else. Bitcoin, blockchain, and other crypto technologies have many inherent flaws and weaknesses, as well as some superior strengths to the dollar. Pros and cons. Open blockchains are most certainly an advancement (with limits) and their open decentralization models foster more trust than centralized greedy bankers and all their debt scams.

[–]wizzwizz4 1 insightful - 2 fun1 insightful - 1 fun2 insightful - 2 fun -  (3 children)

It's backed by nothing except blind trust in the government and [...] the Federal Reserve [...].

I beg to differ. The currency is backed by people treating it as a currency. If the US government says "you won't need to pay taxes on dollars any more because we've given up on the dollar; pay them on Bitcoin instead" then people will sell their bitcoin for US dollars and never touch Bitcoin in the US again, because US dollars will be tax-free currency. Then the country will be in a perpetual government shut-down (or something identical to it) because there will be no money.

I don't believe there is any trust in these two entities backing the currency. It's simply trust in being able to buy stuff from a supermarket.

[–]JasonCarswell 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (2 children)

What is "treating it as a currency"? It's trust that this paper or digital bits in some bank or crypto actually represents something that isn't going to be meaningless tomorrow. It also means that these abstract symbols are universal your dollar is the same as my dollar and we can use them to buy and sell and earn and whatever - without having to line up a complicated barter trade system on a case by case basis.

Terrible examples for too many reasons.

This is not my field so I've never had to explain it to anyone who can't even grasp this fundamental concept. You are very wrong and need to look into it much further, starting with the basics.

[–]wizzwizz4 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (1 child)

I agree with you... except in what the trust is in. You're saying that the trust is in the authority that produces the bank notes. I do not trust the US government or the Federal Reserve at all, and yet I'd still trust that the USD is a reliable currency simply because other people trust it.

That's why Bitcoin is useful. It has value because people trust that it has value, and when they don't it doesn't. You can buy stuff for bitcoin because people trust that they'll be able to buy things with it.

Underneath it all, we do just have a barter trade system. But we're using an intermediate currency as a globally-recognised IOU. It used to be an IOU for a precious metal (since the precious metals were working as an IOU), but now it's an IOU for any resource, be it working time (employment), games consoles (purchase) or food (purchase) because the little bits of paper are now the currency.

Except we're shifting away from that as well; now it's little numbers.

[–]JasonCarswell 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (0 children)

You do get it.