Quote from: Sithara007 on November 07, 2019, 02:03:27 PM

Quote from: JunoCoin on October 23, 2017, 05:37:09 PM

Since many people try to convince us that Bitcoin is a bubble and how we will lose our money eventually, I wonder if money is not a bubble actually. There exist economies in which money has a positive value in spite its market fundamental is zero. That means fiat money has zero value. Fiat money is a social contrivance. We take money from other people because we know other people will take it from us. In theory and practice the fiat money is a bubble.

The fiat banknotes are more like promissory note. Here in India, in the ₹ 2,000 banknotes, it is printed like this:

"I promise to pay the bearer the sum of two thousand Rupees"

The value of that banknote is promised by the central bank. I agree that the banknotes are no longer backed up with gold, but what this means is that fiat currency is not a bubble and it has some value guaranteed against it. If you have fiat money, then you can exchange it to other assets such as gold and silver, as the central bank is guaranteeing its value.

The central bank guarantees that the value of a banknote with a face value of 2000 is 2000, but it does not guarantee what for this value can be purchased. The bubble is created by printing new banknotes. Simply by increasing supply, the purchasing power of money automatically decreases. In other words, you can buy less items for the same value. Value is not changing, but power of value is lower.