Considering most/all? crypto is backed by literally nothing, it makes sense.
The fact that so many people bought into the hype will continue to amaze me for the rest of my life.
The fact that so many people bought into the hype will continue to amaze me for the rest of my life.
I'm on about year 10 of this amazement. Even tulip mania only lasted 1-2 years. Crypto keeps inventing new snake oil and is continually able to sell it. It's so odd to me.
Edit: I obviously mean in the developed world.
I think until it's dead we're not going to see any change from that.
By the way, it's not just a lot of second hand GPUs that will come back to the market. A lot of quants too!
Just morally bankrupt.
Cryptocurrencies like Bitcoin don't have that feature, but that just makes them more like fiat currencies. You could argue that fiat currencies are backed by the force the state is willing to use to get its population to pay taxes in the currency, but that's not a stable backing, as the state could decide to accept another currency at any time. Some states do allow for tax payments in other currencies, which means that some fiat currencies have no backing by that mechanism. Some people are also forced to pay in Bitcoin, for example to ransomware, which should have a similar effect in forcing people to use the currency.
Ultimately, I don't see why a currency would need backing. There is nothing wrong with a currency gaining value purely from its value and utility as a currency. Many other valuable things such as precious metals and art gain a large part of its value in the same way.
I mean, the problem with that is twofold:
1. If it has value as a currency then it gaining value incentivizes hoarding of the currency. If it is going to be worth more tomorrow, why spend it? In that case it has failed as a currency since the economy cannot grow without economic activity; specifically currency movement
2. If it only has value because people perceive it to have value (specifically, there is no need to use this currency over any other) then it is all based on faith. At that point a rapid devaluation can be triggered by any number of market actions -- all it takes is a little wavering for a selloff to start and the snowball starts rolling down the hill. This is the reason that crypto cultures can be so toxic -- if you start to question any of it (rock the boat) it is an existential crisis and you get the appropriate response, so no one is willing to question the underlying economics for fear of social repercussions
You may get amazed as many times you need before learning why people find value in it.
So, in sum, gold can be used in the manufacture of durable, long-lasting goods. It's crucial for certain electronics. There's a constant demand for it for turning into goods. Other rocks can be used for other things, like ground covering, structural support, etc. Bitcoin can be used for?... ? ... ? ... ? nothing
But even without them its value would not go to zero; ignoring the purely aesthetic uses (jewelry, decorations, etc.,) elemental gold has a wide variety of uses including corrosion-resistant electrical contacts, dental fillings, etc.; the James Webb Space Telescope mirrors have a gold coating as it is a good reflector of infrared radiation.
It's not just gold bugs: central banks worldwide are stockpiling on gold at record levels lately.
https://www.reuters.com/markets/commodities/record-central-b...
Sure, people could collectively decide that gold isn't valuable and that certainly happens to some extent as the commodity markets fluctuate, but in general when you get to the bottom of the turtle stack, gold has more fundamental value than most other forms of money.