Post
Topic
Board Altcoin Discussion
Re: Altcoin - the alternative cryptocurrency?
by
miscreanity
on 17/08/2011, 15:29:29 UTC
There are sufficient dollars (if this trade is so important to the economy). Each item will be traded at $0.10 and the sky will not fall!

That was a hypothetical for use as an example. Don't focus on the term used, since anything can act as the currency.

I could've said:

Quote
"When there are 10 skyhooks in an economy that has a hundred items for immediate trade, there are insufficient skyhooks to facilitate trade."

The point is that skyhooks are being used by the trading participants to make trade easier. Without enough skyhooks, something else must be used, or trading must be done in-kind (barter).

We can go with currency exchange for further clarification. Let's say that I have 10,000 USD and you have 15,000 BRL. The value representation is approximately equal with 1 US dollar equivalent to about 1.5 Brazilian Reals. If I want 7,500 of your BRL, but you want gold instead of dollars, I will have to use 5,000 USD to buy the appropriate amount of gold. If I can only get 2,000 USD worth of gold, I won't be able to give you enough gold for 7,500 BRL. You would only be willing to exchange for the 3,000 BRL worth of gold that I now have.

The trade is limited by the amount of common currency, in the last case, gold. Obviously there is more gold than that in the world, but again, the situation was hypothetical - an example. Try not to get caught up in the details.