The only way to understand it in a real sense is to realize that currencies don't have to make any sense whatsoever. If people accept it, it's a viable currency. Literally nothing else matters.
Fun fact: 90% of USD doesn't physically exist according to the Fed itself.
I agree with you about Economics: the USD is based on one economic "story" and Bitcoin on a different one.
The part that gets weird is when people describe the USD through the lens of the Bitcoin story, which is really common in the Bitcoin and Gold communities but I don't think actually helps people understand the USD and how it works. If people are going to make an informed decision, they should be looking at Bitcoin through the lens of the claims of Bitcoin Economics, and USD through the lens of Fed Economics, and decide which if any are credible.
Sorry if the tone in the grandparent post came across as a little harsh, I know it's always easier to criticize than to create something yourself.
USD is based on the GDP and productivity output of the entire United States (25% of the entire world's economy), as well as the indirect backing of the cool little thing known as the United States Armed Forces, just incase. And many more things.
People who constantly make this argument don't actually understand how economics and monetary value actually work. They've just heard someone say it and, like most bro-science, it sounds about right so it should be right!
Right from the jump, they'd know that among the many other worthless parts of BTC, if we actually had a deflationary currency be the standard it would be a horrible, horrible reality.
Money is ultimately just a standardized indicator of wealth with no intrinsic value on its own, a definition shared by both USD and BTC. The downside of USD being that it can be counterfeited, illegally by unscrupulous individuals or legally by the Federal Reserve (see: QE Infinity).
Regrettably, it's still super common for people to turn up their noses in disgust, claiming "Bitcoin Boogey Man, oh noezzz"!
I'm sorry, does the USD somehow not come with a Boogey Man? Because last I checked HSBC was caught with their pants down directly funding terrorism through shady business practices, Bernie Madoff is still in prison for running a giant Ponzi, the illegal narcotics trade is done mostly in USD, plus you have money laundering, and just about every crime conceivable being carried out in USD.
But wait, the Bitcoin Boogeyman!!!
Everyone come to look!
The USD is dirtier than Bitcoin by several orders of magnitude. It's been taking a full out mudbath every day of its life for the past several decades. It's just that the USD is all people know, so they assume it's squeaky clean, because how could it not be squeaky clean??
This is where the bitcoin boosters start to seem a little looney to me. 99% of my experience with currency has been with USD, which have been relatively stable from month to month.
It is a difficult situation because it appears that when people take the time to learn about it, they become big fans of bitcoin but also start worrying about the total collapse of the fed and the USD. I am trying to understand the argument, but I remain skeptical.
It is very interesting to watch and play with though.
This is incorrect. The usd in existence are just reserves. They are not actual spendable money beyond circulating somewhere inside the plumbings of global banking. Said plumbings are things even experts do not fully grasp so I’ll assume no one on this forum has read and understood it. Money did not enter the economy at the same rate it was printed. This is why all the money velocity charts are only shared by charlatans on finance twitter who mostly haven’t spent more than a few years at a serious desk before thinking they understood everything and took off. If you remained inside a high earning position with that level of knowledge, they’d get rid of you really fucking quickly.
Pretending that there aren't fundamentals behind the USD is ridiculous.
How do those people collectively agree on the value of the USD? By looking at the fundamentals - the economy of the US, the stability of its government, the likelihood that it will make good on its bonds.
Wrong question, I think. This thing is barely a currency. It has built-in deflation, which makes it a great long-term store of value (assuming it isn't killed somehow) in a world of depreciating alternative stores of value, but a bad currency. If you want a currency for day-to-day use, USD is what you want. If you want to hedge against USD depreciation, BTC is one option.
The USD lost 98% of its value before bitcoin ever existed. The idea that sophisticated investors have been putting their money into USD and need crypto people to explain inflation to them is ridiculous.
It is equally ridiculous that crypto people think that having a fixed supply of something makes it valuable. Oceanfront property in Miami is also limited, but crypto people are not pumping that because they are not invested in Miami oceanfront property.
It fluctuates drastically over time with a bias to the upside as time goes on. And I agree due to the fluctuations it really isn’t a currency but a store of value... assuming it never gets hacked or considered illegal by all countries lol.
What people refuse to believe is that a currency is actually a reflection of the real world. Yes there is some filtering going on and time lags can be huge but any well managed currency is only going to perform as well as the real economy.
Fun fact: 90% of USD doesn't physically exist according to the Fed itself.
That's way crazier than bitcoin.
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