Because that's to me what it looks like functionally, while some people I know seem to deny this is what they're doing and telling themselves "it's the future of everything" for no other reason than that's what they want it to be (so they can make bank off of their speculative bet).
It is incredibly hard to predict if such a consensual reality will collapse -- but it can collapse if there is a strong "vibe shift" towards something else that competes effectively with the current "consensus."
It is like fashion. What is considered stylish and not is just a group consensus. And it can shift relatively quickly, but it is hard to predict and certain people in key nexus have a lot more influence than the ramble.
Things that make Lira less mythological and more intrinsicly valuable include:
- It is a more stable store of value
- It holds a more stable relationship to the value of everything else in the Turkish economy
- It is more widely accepted for buying and selling good and services
These three things are real world practical differences.
Traditional state-based currencies mostly exist because the government pays its obligations in that currency and also collects taxes in that currency. The state's population is forced to use that currency as a result for these behaviors.
This is the main difference between a state-backed currency and "private currencies."
This isn't to say that state-backed currencies can be a mess just like "private currencies." But these state-backed currencies fail with the governments based on balance of payments and debt and money printing, etc and it is very infrequent.
At all times in unstable monetary conditions, such as hyperinflation, funny-money issued by occupation authorities, unrecognized governments, fiat currency mismanagement, etc, people have flocked to alternative means of exchange. Usually using foreign currencies or other assets (precious metals, whatever). Now there is more choice here. There are reports from places in such conditions of people actually using digital assets for this. Whether it's better to hold Lira or Dash at this particular moment in time though, is a pretty open question.
[1] https://www.ecb.europa.eu/press/key/date/2022/html/ecb.sp220...
I think that most major currencies will have mirror cryptocurrency versions as state-backed entities, replacing USDT and the similar more hand-wavy versions. This is definitely going to happen.
But this isn't "private currency" rather it is just the evolution of state-backed currency.
> At all times in unstable monetary conditions, such as hyperinflation, funny-money issued by occupation authorities, unrecognized governments, fiat currency mismanagement, etc, people have flocked to alternative means of exchange.
Make sense. If your country is in hyperinflation, do not hold its currency.
> There are reports from places in such conditions of people actually using digital assets for this. Whether it's better to hold Lira or Dash at this particular moment in time though, is a pretty open question.
Dash lost most of its value in the last 2 months. I am unsure what your point is. Dash obviously is a speculative asset and it is super hard to predict its future direction.
EDIT: When ECB talks about private money they mean non central bank issued digital assets, among other things. Not their CBDC which would of course be public money.
$DASH meanwhile is a speculative "investment" with no underlying assets that most people has no idea exists.
$DASH could go to 0 tomorrow and it would probably not be reported on outside of crypto sites. Neither of those things is true for the Lira
Ultimately through threat of violence or depriving of liberty. That is, it is the state's monopoly on violence which makes a currency. Bitcoin, being state-less, has no such monopoly and must ultimately fail.
Although Venezula seems to have been making a first pass at it.
The reason is simple: The Turkish Lira has a government (complete with courts, military, bureaucrats, police, banks, etc) that has committed to enforcing transactions in the Lira.
Does that mean the speculative market for Lira must be bigger than bitcoin? No, of course not. But it does mean there's fundamental utility to the Lira that absolutely does not exist for bitcoin.
If you can't point to any math to justify a given price, there is no intrinsic value. Thus price is only driven by speculative factors.
With stocks there are earnings that can be distributed back to shareholders. This is a measurable and explainable fundamental factor.
Real estate has rents... Bonds have coupon payments. Crypto has nothing. Though some will pay you "yield" by diverting money from newer entrants... Aka pyramid-esque structure
Crypto has none of these. And if it's a good investment, then it's definitely not a good currency
The Bank of England would like a word with you.
As an investment vehicle, it's exactly as you say; there is no fundamental value it represents. As a currency, it has no governmental backing, and while it's possible to trade in currencies, the profit lies in the trade, and the various differing rates of exchange, NOT in the underlying currencies themselves. No one holds currency expecting deflation to make them better off.
In that long conversation, the most compelling 'use' was it's 'non use'. That it is intrinsically rare and so as long as it's achieved a sufficient momentum to continue to exist (aside from transactions, we went over various uses for the blockchain that I was struggling to understand), just having some is itself a diversification and thus valuable for that. Diversification like having some precious metal is too. 'Having' being an important point. Another friend was a gold nut (I mean that in a non-pejorative sense, a term he used) that wouldn't touch gold futures or any form of 'contractual gold' and wasn't that keen even on security boxes.
In this, Bitcoin did make some sense. Just hanging on to some. Not for investment purposes, and not for speculative purposes, but for, depending on your perception, the value you may find in something 'rare' in your (somewhat) physical possession. This may be for a time of turmoil when 'rare' assets are extremely valuable, especially divisible ones (sufficiently 'rare' cash, for example, is well documented to be valuable at these times). 'How much' depending on your appetite: appetite for an asset _held for this purpose_ (a purpose that isn't investment or from-time-to-time speculation), and this 'how much' (price*quantity) re-balanced not based on a Bitcoin's price (nor gold's price per ounce) - from this perspective the day-to-day 'price' of Bitcoin becomes less relevant, re-balancing better smoothed than marked-to-market daily given it's volatility.
[A small aside, but on this 'rarity': I remember clearly the first time I held a gold bar, by no means a common occurrence in my life. It was beautiful. Shaped more like a house brick than something stacked in Fort Knox, it had the portrait a family embossed on it, two parents, three children, the family dog, the chateau in which they lived, and their signatures. It was cast at the time of the French Revolution, and sits, certainly when I handled it and I imagine still today, unclaimed, in London, where it was sent for safe keeping. Sad.]