But…But It’s Backed By Nothing

One of the biggest and most ridiculous claims against cryptos like Bitcoin and Ethereum is that they have no inherent value except that we believe they do.

Nothing has any inherent value except the value we put in it.

Well maybe food, water, shelter does, but beyond those basics, what else? Not much. Even gold and diamonds are just some shiny shit we dug out of the ground and we liked it because it shimmers. No real value and barely any utility.

Your USD is backed by nothing. It only has value because we all agree it has value.

But wait, you say, it’s backed by the US government. Sure, but what’s that really worth in a serious crisis? How’s that working out in Venezuela right now?

We tend to think of trust as a fixed trait. It’s not.

Trust is a moving concept.

If my government was stable for fifty years and then a bunch of morons get elected who do stupid shit, that trust is now worth shit, as is their backing.

A backing by a central entity is no guarantee of anything. At multiple points in history, currencies from major industrialized nations have gone into a tailspin despite that backing. Think Germany before WWI, which led directly to WWII.

It can even happen here. And it has.

J.P. Morgan once bailed out the U.S. Treasury because they were broke.

But this is the modern world you say. Nothing like that can happen again.

Sure.

Last I checked we’re only seventy years out of a war that consumed the planet, cratered multiple economies and currencies and killed 50 million people. That’s barely a picosecond on the grand scale of human time. If you think we’re so evolved since then, as multiple governments across the planet wage war on the post-world war alliances that have bound us together for seventy years, then I don’t know what to say other than you believe in fairy tales about human nature. Human nature is the same dark creature it’s always been and it can turn on us in a second.

But wait you say, the USD has inherent power as a store of value and a means of transacting business!

But Bitcoin and other cryptos are now more and more valuable every day as they fund companies through ICOs and through the thousands of decentralized apps that companies are building for them right now.

Tomorrow they’ll be even more valuable because they’ll power voting, gaming, issuance of shares and even security and reputation banks.

That’s a hell of a lot more valuable than just a means to buy Beanie Babies and iPads and Snickers.

Oh, and Bitcoin’s long-term trend is up. The US dollar’s long-term trend is down. It bleeds value little by little, slowly eroding your purchasing power like cancer eating away at you for years without you seeing or feeling it. It’s called inflation. One day you will wake up and find your dollar is worth a lot less than it once was because it’s designed to decrease in value over time.

Bitcoin and Ethereum are not just any other asset, like gold or silver or stock in a company.

They’re shares in an economy.

It’s just hard to see right now because it’s a banana republic economy.

But in five to ten years, it will be a third-world economy and then a second-world economy and then a first-world economy. And everyone will be wondering, why didn’t I see that coming? I wish I got in back then when everyone was missing the forest for the trees.

Imagine buying shares in the United States when the first settlers got here and swindled the Native Americans out of Manhattan.

What would those shares be worth today?

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DISCLAIMER: Be a big boy or girl and make your own decisions about where to put your hard earned money. I am not a financial adviser and this is not financial advice and if I really need to tell you this then it’s best to keep your money in your pocket anyway.

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