Quote from: webtricks on April 22, 2020, 12:45:39 PM

Quote from: Korusek on April 21, 2020, 08:41:21 PM

Hello good people.

I'm reading about all this cryptocurrency for a little while now (hard not to its all over and everywhere) and I got some questions that I could not find a satisfying answer.

1. There is no question about Fiat money (whatever it is $, £ or euro.) thats its losing it's value, so the question is. If it got no value what value Bitcoin have then ? ( i will use bitcoin for must common crypto but thinking of any). Can't get my head over it.

We have to understand that fiat money has no utility, it is just a piece of paper which is used to denote value. In other words, fiat money is the tool used to measure the value of any commodity on Earth.

So when the economy is facing crisis or the economy is developing at very rapid pace (it can be any of the two cases), then the value of most of the commodities in the economy rise. But people consider the opposite, they think that the value of money is decreasing which is wrong assumption. Value of money remain the same, only the purchasing power (PP) of money decreases. If I have $100 then that 100 dollar bill will retain its $100 value even after 100 years. But I may not able to buy as much goods from that currency note as I can today.

Now talking about purchasing power, PP of any currency cannot become zero. It may fall and fall and everything may become too expensive. But currency will always retain its PP else commodities will become priceless because anything divided by zero gives infinity.

People started confusing intrinsic value of money with market value due to the popularity of Forex Market. Forex has turned money into commodity and we start valuing currencies in terms of other currencies. Else, in the closed economy (i.e. within the boundary of country), the value of currency never fluctuates/remain constant.

So don't worry. If the PP of fiat money falls, the price of Bitcoin will rise but you will never face a situation where the price of Bitcoin will become immeasurable.

The second part of your query has the same answer.

wow awesome answer, thanks for your contribution and i have really learnt alot from your comment over here

sifonE

Posts

Merits