Hello, my name is John, and when I talk about cryptocurrencies, I frequently get comments claiming that Bitcoin, Ethereum, and other cryptocurrencies are worthless.
That they are simply inflating its worth artificially.
And you know what? That is correct.
I’ve also heard that they’re not real since they just utilise virtual money and not tangible money.
That is also correct.
However, in this blog article, I’d want to put things into context.
I’m not trying to persuade you to buy cryptocurrency; I’m simply putting things in context.
So let us begin with the argument that cryptocurrencies only exist in the virtual world and that if all computers were destroyed, there would be no cryptocurrencies remaining.
That is undeniably true, but the same can be said about the currencies we use on a daily basis.
Consider the dollar: there are about 14.4 trillion US dollars in existence, yet only 1.7 trillion of those exist in physical form (that is coins or banknotes).
That is only 11% of the total.
The remaining 89 percent is simply virtual money, recorded as a number in financial institutions’ systems.
As a result, our “actual money” is not that unlike to cryptocurrencies.
The second point I’d like to make is that many people believe paper money is valuable because it is backed by a commodity such as gold.
This is referred to as the “gold standard.”
A system in which the value of a currency is linked to the amount of gold in circulation.
This has two consequences: first, it ties the value of a currency to the value of gold.
This is seen to be a beneficial thing because gold prices are not volatile.
Second, the supply of a currency is now restricted to the quantity of gold in your possession.
If you want to make more money, you must first obtain more gold.
The gold standard had been in operation for a long time, but it was abandoned in 1971 when President Nixon chose to remove the dollar’s convertibility in gold.
This meant that the dollar’s value was no longer tied to gold, and it was permitted to “float.” It also let the government to manage the supply of money by printing more whenever it was required.
This might be done, for example, to mitigate the effects of an economic downturn.
Other nations quickly followed, and the globe transitioned from the gold standard to what is known as “fiat money”: a currency with no fundamental value.
In reality, currencies only have value because governments have proclaimed them legal tender and we all agree that they are worth something.
That’s all there is to it.
Our current monetary system is only kept together by our confidence in the worth of money.
We are willing to go to work every day in order to get paid because we think that someone else will trade our hard-earned money for something else, such as food or a place to live.
It is, in fact, a self-fulfilling prophesy.
We all believe that our money has worth, therefore it does.
Hyperinflation occurs when people lose faith in the value of money or when the government can no longer guarantee it.
The value of money falls, while the cost of commodities rises dramatically.
This has happened a few times in history.
For example, in Germany following World War I.
Every two days, the price of commodities doubled.
People used to burn their money since it was cheaper than buying firewood.
So, since our money has no actual worth, shouldn’t we all start buying gold?
We might go a step farther and ask, “Why is gold deemed valuable?”
Sure, it’s a gleaming metal with beneficial qualities.
Is it, however, sufficient?
Could we also claim that gold has no actual value?
That we all believe in and agree on?
That is entirely correct.
Throughout history, gold has been regarded as one of the most expensive metal available, owing to its distinct appearance.
But that’s all there is to it.
The only thing gold has going for it is that it is somewhat scarce, which is important in some sectors such as electronics.
Aside from that, gold is basically like money.
Now it’s time to wrap things up.
People are correct when they argue that cryptocurrencies have no value.
They are, however, mistaken in believing that the Dollar, Euro, or Yen are any different.
We made them, and everyone of us is committed to maintaining the belief that they are valuable.
That concludes this video.
I hope this helped to clarify the situation.
Please share your opinions in the comments section below.